Atul Ltd 2013-14

Atul Ltd | Annual Report 2013-14 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (contd) other assets on ‘Written Down Value’ basis in accordance with the provisions of Section 205 (2) (b) and 205 (2) (a) of the Companies Act, 1956, respectively, in the manner and at the rates specified in Schedule XIV to the said Act. An amount in respect of assets revalued in the past, the depreciation charge over the enhancement to cost is withdrawn from the revaluation reserves and adjusted against the depreciation charge each year. In respect of assets received free of cost (see 4a ii), from this year, an amount equivalent to the depreciation is withdrawn from capital reserve and transferred to general reserve. Depreciation on additions to the assets during the year is being provided on pro-rata basis at their respective rate with reference to the month of acquisition | installation. Depreciation on assets sold, scrapped or discarded during the year is being provided at their respective rates up to the month in which such assets are sold, scrapped or discarded. Depreciation is adjusted in subsequent periods to allocate the revised carrying amount of assets after the recognition of an impairment loss on a systematic basis over its remaining useful life of assets. Amortisation Expenses: a) Premium on leasehold land is amortised over the period of lease. b) Computer software is amortised over a period of three years. 4.6 Impairment of Assets: The carrying amounts of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal | external factors. An impairment loss on such assessment will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances. 4.7 Finance Costs: Borrowing costs in relation to acquisition and construction of qualifying assets are capitalised as part of cost of such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged as expense in the year in which these are incurred. 4.8 Investments: Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. Current investments not intended to be held for a period more than one year, are stated at lower of cost or fair value. 4.9 Inventories: a) Raw materials, packing materials, purchased finished goods, work-in-progress, finished goods manufactured, fuel, stores and spares other than specific spares for machinery are valued at cost or net realisable value whichever is lower. Cost is arrived at on moving weighted average basis. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. b) Goods-in-transit and in bonded warehouse are stated at the cost to the date of Balance Sheet. c) ‘Cost’ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition. d) Due allowances are made for slow moving and obsolete inventories based on estimates made by the Company. Notes to the Consolidated Financial Statements