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Moneycontrol.com India | Accounting Policy > Engineering > Accounting Policy followed by Vulcan Engineers - BSE: 522080, NSE: VULCANENG
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Vulcan Engineers
BSE: 522080|NSE: VULCANENG|ISIN: INE699C01017|SECTOR: Engineering
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Vulcan Engineers is not traded in the last 30 days
Dec 11
Accounting Policy Year : Dec '12
a) Basis of accounting:

The financial statements have been prepared in compliance with all material aspects of the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, to the extent applicable except as disclosed in notes and in accordance with the relevant provisions of the Companies Act, 1956.

These accounts are prepared on historical cost convention (except certain fixed assets which are at revalued amounts) and on the accounting principle of going concern basis.

The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.

b) Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affects 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. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets:

Fixed assets are stated at cost of acquisition (which includes freight, duties, taxes and incidental expenses) or at revalued amount (wherever the assets are revalued) less accumulated depreciation.

Computer software, where it is expected to provide future enduring economic benefits is capitalised. The capitalised cost includes license fees and cost of implementation / system integration services.

d) Depreciation and amortization:

Depreciation on assets is provided on straight-line method on pro-rata basis at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. The value of leasehold land is amortised over the period of the lease and sheds and portable units are amortised over a period of 12.5 years.

Capitalised software costs are amortised on straight line method over their useful lives as estimated by management.

e) Revenue recognition:

Revenue in respect of sale of goods is recognised when significant risk and rewards of ownership are transferred to the customers.

In case of divisible contracts, revenue is recognised as the contract activity progresses based on percentage completion method. In other cases, revenue is recognised on accrual basis except in case of significant uncertainties.

Revenue from services is recognised on accrual basis as per terms of the contractual agreement.

f) Inventories:

Material and components are valued at lower of cost or net realisable value. Cost is ascertained on first-in first-out (FIFO) basis.

g) Foreign currency transactions:

Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gains and losses arising on account of differences in foreign exchange rates on settlement / translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.

h) Retirement benefits:

Provident fund contributions payable are charged to statement of profit and loss.

Liability for accumulated leave is provided on the basis of actuarial valuation as at the year-end.

Liability for gratuity is provided on the basis of actuarial valuation as at the year end and funded with Life Insurance Corporation of India.

i) Lease:

Leases where the lessor effectively retains substantially all the risks and benefits of the lease term are classified as operating leases. Lease rentals in respect of properties acquired under operating leases are charged off to the statement of profit and loss as incurred.

j) Accounting for taxes on income:

Tax expenses comprises of current tax and deferred tax.

Current tax represents tax on profits for the current year as determined as per the provisions of the Income Tax Act, 1961.

The deferred tax for timing differences between the book and tax profits for the year are accounted based on tax rates in force and tax laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences, are recognised to the extent there is reasonable / virtual certainty that these would be realized in future and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

k) Accounting for provisions and contingent liabilities:

A provision is made when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

I) Impairment of assets:

The Company assesses, at each balance sheet date, whether there is any indication that an asset may be impaired. If any such indication exists, the management estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and recognised in the statement of profit and loss. If, at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of depreciated historical cost.

m) Earnings per share:

The basic earnings per share (EPS) is computed by dividing the net profit or loss after tax for the year available for the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit or loss after tax for the year available for equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

Source : Dion Global Solutions Limited
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