Atul Ltd 2015-16

Atul Ltd | Annual Report 2015-16 Notes to the Financial Statements Note 1 Significant Accounting Policies 01. Basis of preparation: The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles in India under the historical cost convention on accrual basis except for certain buildings which are being carried at fair valued amounts. Pursuant to Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 will continue to apply. The Ministry of Corporate Affairs (MCA) has notified the Companies (Accounting Standards) Amendment Rules, 2016 vide its notification dated March 30, 2016. The said notification read with Rule 3(2) of the Companies (Accounting Standards) Rules, 2006 is applicable to accounting period commencing on or after the date of notification i.e. April 1, 2016. Consequently, the Financial Statements have been prepared to comply in all material aspects with the Accounting Standard notified under Section 211(3C) of the Companies Act, 1956, Companies (Accounting Standards) Rules, 2006, as amended and other relevant provisions of the Companies Act, 2013. The Accounting Policies which have been applied consistently, except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard required a change in the Accounting Policy hitherto in use, are set out below. All the assets and liabilities have been classified as current or non-current as per the normal operating cycle of the Company and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities. 02. Use of estimates: The preparation of the Financial Statements in conformity with Generally Accepted Accounting Principles requires the Management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the Financial Statements and the results of operations during the reporting period. These estimates are based on the evaluation of the relevant facts and circumstances as on the date of the Financial Statements by the Management, which may differ from future revisions and actual results in subsequent periods. Differences are adjusted in subsequent periods as they occur. 03. Fixed assets: a) Tangible assets: i) Fixed assets other than ii) below are carried at cost of acquisition|construction including incidental expenses directly attributable to the acquisition|construction activity, as the case may be, less accumulated depreciation, amortisation and impairment as necessary. ii) Assets received free of cost on premature cancellation of a Lease Agreement are valued at fair value at the time of receipt by credit to Capital reserve less accumulated depreciation and impairment as necessary. iii) Spares specific to a machinery are carried at cost and allocated over the useful life of the asset. iv) Capital work-in-progress is carried at accumulated cost incurred upto the date of the Financial Statements. v) Expenditure incurred on cultivation of plantations upto the date, they become capable of bearing fruit are accumulated under ‘Capital work-in-progress’ and then capitalised as a fixed asset to be depreciated over their estimated economic life. b) Intangible assets: Computer software includes enterprise resource planning project and other cost relating to software which provides significant future economic benefits. Costs comprise license fees and cost of system integration services. 04. Depreciation and amortisation expenses: Depreciation: a) Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets. b) Depreciation is calculated on a pro-rata basis from the date of acquisition | installation till the date the assets are sold or disposed of.