SENSEX NIFTY India | Accounting Policy > Computers - Software Medium & Small > Accounting Policy followed by HOV Services - BSE: 532761, NSE: HOVS

HOV Services

BSE: 532761|NSE: HOVS|ISIN: INE596H01014|SECTOR: Computers - Software Medium & Small
Jan 20, 16:00
9.8 (7.66%)
VOLUME 277,908
Jan 20, 15:52
11.15 (8.71%)
VOLUME 984,328
« Mar 14
Accounting Policy Year : Mar '15
1.  Company Information:
 The Company was incorporated in 1989 under the Companies Act, 1956 as
 Codec Communication Pvt. Ltd with registration number 25-14448. The
 Company commenced its operations on January 10, 1989. In March, 2006
 the Company changed its name to HOV Services Limited as a part of its
 plans to create brand recognition among its customers. The Company is
 engaged in providing IT and IT Enabled Services such as Data Entry
 Services, Software Development and Support Services.
 2.  Basis for Preparation of Financial Statements:
 The Financial Statements are prepared in accordance with the Generally
 Accepted Accounting Principles (GAAP) applicable in India under the
 historical cost convention, on the accrual basis, in compliance with
 the Accounting Standards (AS) prescribed by the Companies Act, 2013 to
 the extent applicable and on the principles of a going concern.
 3.  Use of Estimates:
 The preparation of financial statements in conformity with AS and GAAP
 requires management to make estimates and assumptions that affect the
 reported amounts of assets and liabilities and the disclosures of
 contingent liabilities on the date of financial statements and reported
 amounts of revenue and expenses for that year. Actual result could
 differ from these estimates. Any revision to accounting estimates is
 recognized prospectively.
 4.  Revenue Recognition:
 Revenue from Software & IT enabled services are recognized as per the
 work orders/agreements entered with the customers.
 Rental and Interest income is recognized on time proportion basis and
 is disclosed under Other Income.
 5.  Fixed Assets:
 Tangible: Fixed assets are stated at historical cost, which comprises
 of purchase consideration and other directly attributable cost of
 bringing an asset to its working condition for the intended use, less
 accumulated depreciation.
 Intangible: Costs that are directly associated with identifiable and
 unique software products controlled by the Company, developed in-house
 or acquired, and have probable economic benefits exceeding the cost
 beyond one year are recognized as software products. Other acquired
 softwares meant for in-house consumption are capitalized at the
 acquisition price.
 6.  Impairment of Assets:
 In accordance with AS 28 on ''Impairment of Assets'' prescribed by the
 Companies Act, 2013 where there is an indication of impairment of the
 Company''s assets related to cash generating units, the carrying amounts
 of such assets are reviewed at each balance sheet date to determine
 whether there is any impairment. The recoverable amount of such assets
 is estimated as the higher of its net selling price and its value in
 use. An impairment loss is recognized in the statement of Profit and
 Loss whenever the carrying amount of such assets exceeds its
 recoverable amount. If at the balance sheet date, there is an
 indication that a previously assessed impairment loss no longer exists,
 then such loss is reversed and the asset is restated to extent of the
 carrying value of the asset that would have been determined (net of
 amortization / depreciation), had no impairment loss been recognized.
 7.  Depreciation / Amortization:
 a) Tangible Assets - Depreciation on fixed assets is provided based on
 useful life and in the manner prescribed in part C of Schedule II of
 the new Companies Act, 2013.
 Investment property is amortized over the period of lease.
 b) Intangible Assets - Software product (meant for sale) are amortized
 over its estimated useful life of 8 years. Other Software products are
 amortized over its period of license.
 8.  Investments:
 Investments are classified into long term and current investments.
 Long-term investments are carried at cost and provision is made to
 recognize any decline in the value other than temporary in the value of
 such investments. Current investments are carried at the lower of the
 cost or fair value/market value and provision is made to recognize any
 decline in the carrying value of the investments. Investment in
 property is recognized at cost less amortization.
 9.  Employee Benefits:
 a) Gratuity:
 The Company provides for gratuity, a defined benefit retirement plan,
 covering eligible employees.  Liability under gratuity plan is
 determined on actuarial valuation done by the Life Insurance
 Corporation of India (LIC) at the beginning of the year, based upon
 which, the Company contributes to the Scheme with LIC. The Company also
 provides for the additional liability over the amount contributed to
 LIC based on the actuarial valuation done by an independent valuer
 using the Projected Unit Credit Method.
 b) Provident Fund:
 Retirement benefits in the form of Provident Fund / Pension Fund is a
 defined contribution scheme and the contributions are charged to the
 Statement of Profit and Loss of the year when the contributions to the
 respective funds are due.
 c) Leave Entitlement:
 Liability for Leave entitlement for employees is provided on the basis
 of Actuarial Valuation done at the year end.
 10.  Foreign Exchange Transactions:
 Transactions in foreign currency are recorded at the rate of exchange
 in force on the date of the transactions.  Current assets, current
 liabilities and borrowings denominated in foreign currency are
 translated at the exchange rate prevalent at the date of Balance Sheet.
 The resultant gain or loss is recognized in the Statement of Profit and
 11.  Accounting for Taxes on Income:
 Provision for current income tax is made on the basis of the estimated
 taxable income for the year in accordance with the Income Tax Act,
 MAT credit asset is recognized and carried forward only if there is a
 reasonable certainty of it being set off against regular tax payable
 within the stipulated statutory period.
 Deferred tax resulting from timing differences between book profits and
 tax profits is accounted for under the liability method, at the current
 rate of tax, to the extent that the timing differences are expected to
 crystallise. Deferred tax assets are recognized and carried forward
 only if there is a virtual/ reasonable certainty that they will be
 realized and are reviewed for the appropriateness of their respective
 carrying values at each Balance Sheet date.
 12.  Borrowing Costs:
 Borrowing costs attributable to acquisition and construction of
 qualifying assets are capitalized as a part of the cost of such
 assets up to the date when such asset is ready for its intended use.
 Other borrowing costs are charged to Statement of Profit and Loss.
 13.  Leases:
 Where the Company has substantially acquired all risks and rewards of
 ownership of the assets, leases are classified as financial lease. Such
 assets are capitalized at the inception of the lease, at the lower of
 the fair value or present value of minimum lease payment and liability
 is created for equivalent amount. Each lease rent paid is allocated
 between liability and interest cost so as to obtain constant periodic
 rate of interest on the outstanding liability for each year.
 Where significant portion of risks and reward of ownership of assets
 acquired under lease are retained by lessor, leases are classified as
 Operating Lease. Lease rentals for such leases are charged to Statement
 of Profit and Loss.
 14.  Earnings Per Share:
 The earnings considered in ascertaining Earnings Per Share comprise the
 net profit after tax. The number of shares used in computing Basic EPS
 is weighted average number of shares outstanding during the year. The
 number of shares used in computing diluted EPS comprises of weighted
 average shares considered for deriving Basic EPS, and also weighted
 average number of equity shares which could have been issued on the
 conversion of all diluted potential equity shares. Diluted potential
 equity shares are deemed converted at the beginning of the year, unless
 they have been issued at later date.
 15.  Provisions. Contingent Liability and Contingent Assets:
 i) Provisions involving substantial degree of estimation in measurement
 are recognized when there is present obligation as a result of past
 events and it is probable that there will be outflow of resources.
 ii) Disclosures for a contingent liability is made, without a provision
 in books, when there is an obligation that may, but probably will not,
 require outflow of resources.
 iii) Contingent Assets are neither recognized nor disclosed in the
 financial statement.
Source : Dion Global Solutions Limited
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