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Moneycontrol.com India | Accounting Policy > Diversified > Accounting Policy followed by Kokuyo Camlin - BSE: 523207, NSE: KOKUYOCMLN
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Kokuyo Camlin
BSE: 523207|NSE: KOKUYOCMLN|ISIN: INE760A01029|SECTOR: Diversified
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Accounting Policy Year : Mar '13
A.  Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles and the provisions of the Companies Act, 1956. All income and expenditure having a material bearing in the financial statements are recognised on accrual basis.

B. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

C. Fixed Assets

i. Fixed Assets are recorded at cost of acquisition or construction and are stated at historical cost (net of CENVAT and VAT). Interest on project loans and all direct expenses attributable to acquisition of fixed assets are capitalised upto the date of installation. Capitalised hardware/software costs of Enterprise Resource Planning (ERP) system includes cost of designing software which provide significant future economic benefits over an extended period.The cost comprises of license fee, cost of system integration and initial customisation.The costs are capitalised in the year in which the relevant system is ready for intended use.The upgradation/enhancements are also capitalised and assimilated with the initial capitalisation costs.

ii. In compliance with Accounting Standard (AS) 28 - Impairment of Assets issued by the Institute of Chartered Accountants of India (ICAI), the Company assesses on each Balance Sheet date, whether there is any indication that any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

iii. Depreciation on all assets of the Company, except on leasehold land, is provided on straight line basis in terms of the requirements of Schedule XIV to the Companies Act, 1956. Leasehold land is amortised over the respective period of lease. Cost of intellectual property rights is amortised on straight line method over the useful life of 36 months as estimated by the management. Capitalised hardware/software costs of ERP are amortised over the estimated useful economic life not exceeding five years.

D. Investments

Long-term investments are stated at cost and provision is made when there is a decline, other than temporary, in the value thereof. Current investments are stated at cost, or fair value, whichever is lower.

E. Valuation of Inventories

A. Raw Material and Packing Material : At moving weighted average cost, written down to realisable value if the costs of related finished goods exceeds its net realisable value._

B. Work-in-process : At lower of moving weighted average cost, or at net_realisable value.

C. Finished Goods : At lower of moving weighted average cost, or at net realisable value.

F. Excise Duty

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year-end stocks in bonded warehouse. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant input. Input credit not recoverable is charged to the Statement of Profit and Loss.

G. Foreign Currency Transactions

i. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency assets and liabilities are translated at year-end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise,

ii. In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract,

iii. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expense.

H. Research and Development

Revenue expenditure incurred on research and development is charged to Statement of Profit and Loss for the year. Capital expenditure on research and development is accounted as fixed assets.

I. Employee Benefits

i. Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

ii. Post-employment and other long-term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered the service. The expense is recognised at the present value of the amount payable which is determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss for the year.

J. Revenue/Expense Recognition

i. Revenue from sale of goods is accounted for on the basis of dispatch of goods. Sales are inclusive of excise duty and net of sales returns/trade discount.

ii. Revenue in respect of overdue interest, insurance claim, etc is recognised to the extent the Company is reasonably certain of its ultimate realisation.

iii. Remission from excise duty paid in respect of clearance from Jammu plant is recognised as revenue based on legal advice obtained by the Company [refer note no. 18].

iv. Expenses are accounted for on accrual basis.

v. Provisions are recognised when a present legal or constructive obligation exists and the payment is probable and can be reliably estimated.

vi. Lease rentals in respect of assets taken on operating lease are charged to the Statement of Profit and Loss on straight line basis over the lease term.

K. Government grants

i. Grants in the nature of promoters' contribution with reference to total investment in the undertaking or total capital outlay, are treated as capital reserve.

ii. Grants relating to specific fixed assets are deducted from the book value of the related asset.

iii. Grants relating to revenue are credited to the Statement of Profit and Loss and presented as income from operations.

L. Borrowing Costs

Borrowing costs attributable to acquisition of qualifying fixed assets which takes substantial period of time to get ready for its intended use is capitalised as part of the cost of such fixed assets. All other borrowing costs are charged to revenue.

M. Contingent Liabilities

Liabilities are disclosed by way of notes appended to the Balance Sheet in case there is an obligation that probably may not require cash outflow.

N. Accounting for Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the differences between taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods.

O. Earnings per share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard (AS) 20 on Earning per share issued by the ICAI. Basic earnings per equity share is computed by dividing net income by weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding including shares pending allotment.

R Segment Reporting - basis of information

As the entire operations of the Company relate to products categorised under 'consumer products' as the single primary reportable segment, no separate segment reporting is required in terms of Accounting Standard (AS) 17 issued by the ICAI.

Source : Dion Global Solutions Limited
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