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Moneycontrol.com India | Accounting Policy > Miscellaneous > Accounting Policy followed by Nitin Fire Protection Industries - BSE: 532854, NSE: NITINFIRE
Nitin Fire Protection Industries
BSE: 532854|NSE: NITINFIRE|ISIN: INE489H01020|SECTOR: Miscellaneous
Apr 17, 13:29
0.4 (0.73%)
VOLUME 356,210
Apr 17, 12:16
0.9 (1.65%)
VOLUME 478,720
Mar 12
Accounting Policy Year : Mar '13
(a) Fixed Assets and capital work in progress
 (i) Tangible Assets are stated at acquisition cost, net of accumulated
 depreciation and accumulated impairment losses, if any.  Subsequent
 expenditures related to an item of fixed asset are added to its book
 value only if they increase the future benefits from the existing asset
 beyond its previously assessed standard of performance. Items of fixed
 assets that have been retired from active use and are held for disposal
 are stated at the lower of their net book value and net realisable
 value and are shown separately in the financial statements. Any
 expected loss is recognised immediately in the Statement of Profit and
 Loss. Losses arising from the retirement of, and gains or losses
 arising from disposal of fixed assets which are carried at cost are
 recognised in the Statement of Profit and Loss.
 (ii) Intangible Assets are stated at acquisition cost, net of
 accumulated amortization and accumulated impairment losses, if any.
 Intangible assets are amortised on a straight line basis over their
 estimated useful lives. A rebuttable presumption that the useful life
 of an intangible asset will not exceed ten years from the date when the
 asset is available for use is considered by the management.  The
 amortisation period and the amortisation method are reviewed at least
 at each financial year end. If the expected useful life of the asset is
 significantly different from previous estimates, the amortisation
 period is changed accordingly. Gains or losses arising from the
 retirement or disposal of an intangible asset are determined as the
 difference between the net disposal proceeds and the carrying amount
 ofthe asset and recognised as income or expense in the Statement of
 Profit and Loss.
 (iii) Capital work in progress (CWIP) & intangible assets under
 development includes cost of exploratory wells in progress, cost of
 fixed assets not ready to use and interest on loans attributable to the
 acquisition of qualifying fixed assets up to the date of their
 commissioning, if any.
 (iv) Machinery spares which can be used only in connection with an item
 of fixed asset and whose use is not of regular nature are capitalised
 and written off over the estimated useful life of the relevant asset.
 The written down value of such spares is charged to the Statement of
 Profit and Loss on issue for consumption.
 (b) Depreciation, amortisation and impairment:
 (i) Depreciation-tangibles:
 Depreciation on fixed assets is provided on written down value method
 in accordance with the provisions of Section 205(2) (b) of the Act in
 the manner and at the rates specified in Schedule XIV to the Act.
 Depreciation on additions/deductions is calculated pro rata from/to the
 number of days of additions/deductions. In respect of an asset for
 which impairment loss is recognised, depreciation is provided on the
 revised carrying amount of the assets over its remaining useful life.
 In case of revalued assets, depreciation is computed on such revalued
 amounts and an appropriate amount transferred from revaluation reserve
 to statement of profit and loss. Cost of leasehold land is amortised in
 proportion to the period of lease. Individual assets costing less than
 Rs.5,000 are depreciated in full in the year of acquisition.
 (ii) Amortisation-intangibles:
 Intangible assets are initially measured at cost and amortised so as to
 reflect the pattern in which the asset''s economic benefits are
 Expenditure on computer software is amortised on straight line method
 over a period of two years.
 (iii) Impairment of assets:
 The carrying amounts of fixed assets are reviewed at each balance sheet
 date to determine if there is any indication of impairment based on
 internal/external factors. An impairment loss will be recognized
 wherever the carrying amount of an asset exceeds its recoverable
 amount. The recoverable amount is the greater of the assets net selling
 price and value in use. In assessing the 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 circumstances.
 However, the carrying value after reversal is not increased beyond the
 carrying value that would have prevailed by charging usual depreciation
 if there was no impairment.
 (c) Investments:
 Trade investments are investments made to enhance the Company''s
 business interests. Investments those are readily realisable and
 intended to be held for not more than a year are classified as current
 investments. All other investments are classified as non-current (long
 term) investments.
 Non-current investments including investments in subsidiaries
 (profit/loss earned or sustained by subsidiaries is not recognized in
 the books of account) and an associate are carried at cost and
 provisions recorded to recognize any declines, other than temporary, in
 the carrying amount of each investment. Cost of overseas investment
 comprises the Indian Rupee Value of the consideration paid for the
 (d) Inventories:
 Inventories are valued as follows: Items of inventories are valued at
 lower of cost, computed on FIFO basis and net realisable value.  Such
 costs include material cost and other costs incurred in bringing the
 goods to their present location and condition. Goods in transit are
 valued at cost, which represents the costs incurred up to the stage at
 which the goods are in transit.
 (e) Revenue recognition:
 Revenue is recognised to the extent that it is probable that the
 economic benefits will flow to the Company and it can be reliably
 (i) Revenue from domestic sales is recognised on dispatch, which
 coincides with transfer of significant risks and rewards to customers
 and stated net of taxes and returns, as applicable. Revenue from
 exports is recognised when the significant risks and rewards of
 ownership of goods have passed to customers.
 (ii) Fixed price contracts: Contract revenue is recognized only to the
 extent of cost incurred till such time the outcome of the job cannot be
 ascertained reliably. When the outcome of the contract is ascertained
 reliably contract revenue is recognized at cost of work performed on
 the contract plus proportionate margin, using the percentage of
 completion method. Percentage of completion is the proportion of cost
 of work performed to-date to the total estimated contract costs.
 (iii) Income from services rendered on project related activities is
 recognised on due dates of the relevant contracts and is exclusive of
 service tax, wherever recovered.
 (iv) Liquidated damages/penalties, if any, are provided based on
 management''s assessment of the estimated liability, as per
 contractual terms and/or acceptance.
 (v) Interest income is recognised on a time proportion basis taking
 into account the amount outstanding and the rate applicable.
 (vi) The Company is entitled to refund of Special Additional Duty paid
 on imported goods traded or consumed in Company''s activities within
 the prescribed time limit. Accordingly, refund is accrued on
 sale/consumption of such goods.
 (vii) Dividend income is recognised when the right to receive dividend
 is established.
 (f) Taxation:
 (i) Tax expense comprises current tax and deferred tax charge or
 (a) Current tax is measured at the amounts expected to be paid to the
 Tax Authorities in accordance with the provisions of the Income Tax
 Act, 1961 prevailing for the relevant assessment year.
 (b) Deferred tax charge or credit is measured based on the tax rates
 and the tax laws enacted or substantively enacted at the balance sheet
 date. Deferred tax charge or credit is recognised, subject to the
 consideration of prudence, on timing differences, being the difference
 between taxable income and accounting income that originate in one
 period and are capable of reversal in one or more subsequent periods in
 the statement of profit and loss and the cumulative effect thereof is
 reflected in the Balance Sheet. In respect of deferred tax charge or
 credit resulting from timing differences, which originate during the
 tax holiday period but is expected to reverse after such tax holiday
 period, is recognised in the year in which the timing differences
 originate using the tax rates and laws enacted or substantively enacted
 at the balance sheet date.
 (ii) Tax on distributed profits payable is as per the provisions of
 Section 115O of the Income Tax Act, 1961 is in accordance with the
 Guidance Note on Accounting for Corporate Dividend Tax regarded as tax
 on distribution of profits issued by the ICAI and is not considered in
 determination of the profits for the year.
 (g) Cash flow statement:
 The cash flow statement is prepared by the indirect method, whereby net
 profit before tax is adjusted for the effects of transactions of a
 non-cash nature and presents the cash flows by operating, investing and
 financing activities of the Company. Cash and cash equivalents
 presented in the cash flow statement consist of cash on hand and
 balances with banks.
 (h) Foreign currency transactions:
 (i) Initial recognition:
 Transactions for import/export of goods are recorded at a rate notified
 by the customs authorities for invoice purposes. Other foreign currency
 transactions are recorded in the reporting currency, by applying to the
 foreign currency amount the exchange rate between the reporting
 currency and the foreign currency at the date ofthe transaction.
 (ii) Conversion:
 Monetary items are translated at the closing exchange rate as on the
 date of the balance sheet and non-monetary items are reported using the
 exchange rate that existed on the date ofthe transaction.
 (iii) Exchange differences:
 Exchange differences arising on settlement of monetary items or on
 reporting monetary items at rates different from those at which they
 were initially recorded during the year or reported in the previous
 financial statements are recognised as income or expenses in the year
 in which they arise and disclosed as a net amount in the financial
 (i) Employee benefits:
 (i) Employee benefits in the form of provident and family pension fund
 are defined contribution schemes and the contributions are charged to
 the statement of profit and loss of the year when the contributions to
 the funds are due. The Company has no other obligations other than the
 contributions payable.
 (ii) The present value ofthe obligation of gratuity is determined based
 on an actuarial valuation, using the Projected unit credit method.
 Actuarial gains and losses on such valuation are recognised immediately
 in the statement of profit and loss. The fair value of plan assets is
 administered by Life Insurance Corporation of India, is reduced from
 gross obligation under the defined benefit plan, to recognised the
 obligation on a net basis value.
 (j) Earnings per share:
 The basic earnings per share is computed by dividing the net profit or
 loss attributable to equity shareholders (after deducting attributable
 taxes) by the weighted average number of equity shares outstanding
 during the period. For the purpose of calculating diluted earnings per
 share, the net profit or loss for the period attributable to equity
 shareholders (after deducting attributable taxes) and the weighted
 average number of equity shares outstanding during the year are
 adjusted for effects of all dilutive potential equity shares, except
 where the results are anti-dilutive. The number of shares and
 potentially dilutive equity shares are adjusted for share splits and
 bonus shares issued including for changes effected prior to the
 approval ofthe financial statements by the Board of Directors.
 (k) Provisions, contingent liabilities and contingent assets:
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 Notes to the Financial Statements. Contingent assets are neither
 recognized nor disclosed in the financial statements.
 (l) Operating leases:
 Leases where the lessor effectively retains substantially all the risks
 and benefits of ownership of the leased assets are classified as
 operating leases. Operating lease payments are recognised as an expense
 in the Statement of Profit and Loss on a straight line basis over the
 lease period unless another systematic basis is more representative
 ofthe time pattern of the users benefit.
 (m) Exploration and Development Costs:
 The Company follows successful efforts method for accounting of oil &
 gas exploration and production activities, in respect of its
 participating interest in un-incorporated joint venture which includes:
 (i) Survey costs are recognized as revenue expenditure in the year in
 which these are incurred.
 (ii) Cost of exploratory wells is carried as exploratory wells in
 progress. Such exploratory wells in progress are capitalized in the
 year in which the producing property is created or is written off in
 the year when determined to be dry/abandoned.
 (iii) All wells appearing as exploratory wells in progress which are
 more than two years old from the date of completion of drilling are
 charged to Statement of Profit and Loss except those wells which have
 proved reserves and the development of the fields in which the wells
 are located has been planned.
Source : Dion Global Solutions Limited
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