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Moneycontrol.com India | Accounting Policy > Construction & Contracting - Housing > Accounting Policy followed by Arihant Foundations and Housing - BSE: 531381, NSE: ARIHANT
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Arihant Foundations and Housing

BSE: 531381|NSE: ARIHANT|ISIN: INE413D01011|SECTOR: Construction & Contracting - Housing
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Accounting Policy Year : Mar '16

COMPANY OVERVIEW

The company, Arihant Foundations and Housing Ltd was incorporated on 6th March, 1992. The Company is engaged in the business of real estate development of residential, commercial complexes and IT Parks.

NOTE-1: SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PREPARATION

a) The financial statements have been prepared on accrual basis of accounting under the historical cost convention in accordance with the generally accepted accounting principles in India.

b) Accounting policies not specially referred to otherwise are consistently followed throughout the period under audit and in consonance with the generally accepted accounting principles.

B. USE OF ESTIMATES

The preparation of financial statement in conformity with generally accepted accounting policies requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at date of the financial statements and the reported accounts of revenues and expenses for the years presented. 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 AND DEPRECIATION

a) The fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost includes all related expenses incurred up to the date the assets are put to use.

b) Depreciation on fixed assets is provided on straight line method as per rate and manner prescribes in schedule-XIV of the companies Act 1956. The depreciation has been provided at 100% on the Assets purchased during the year the cost of which is less than Rs 5000/-.

D. INTANGIBLES AND AMORTIZATION

Intangible assets are recognized when it is probable that future economic benefits that are attributable to these assets will flow to the company and the cost of the asset can be measured reliably.

E. IMPAIRMENT OF ASSETS

Management at each balance sheet date assesses using internal sources whether there is an indication that an asset or group of assets or a cash generating unit as the case may be, is impaired. Impairment occurs where the carrying value exceeds the higher of value in use represented by present value of future cash flows expected to arise from the continuing use of the asset and its realizable value. The impairment asset is charged off to statement of profit and loss.

F. INVESTMENTS

Trade investments are those made to enhance the Group''s business interests. Investments are classified as either current or long-term, based on the Management''s intention at the time of purchase.

Long-term investments

Long-term investments are stated at cost. However, provision is made for diminution in the value of the asset, which is other than temporary.

Quoted

The company holds investment in quoted securities. They are classified as long-term as the Management intends to hold the same for a period of more than twelve months. These investments are classified as non-trade.

Unquoted

The company holds investment in unquoted securities of its subsidiaries, joint ventures and associates. These investments are classified as trade.

G. INVENTORIES

a) Raw materials and consumables

The cost of inventories comprise of purchase cost and conversion cost, if any.

b) Work -in-progress

Costs generally include cost of land, construction costs, job work allocated borrowing costs and other costs that are attributable to project and such other costs as are specifically chargeable to the project. Work-in-progress are valued at cost less cost of sales.

c) Finished stock

Finished stock consists of completed real estate projects which are unsold at the end of the financial year.

H. BORROWING COST

Borrowing cost that are directly attributable to the acquisition or construction or development of qualifying assets of the company are capitalized until the time all substantial activities necessary to prepare the qualifying assets for the intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.

Borrowing cost that are attributable to any work-in-progress, qualifying land advances as well as capital work-in-progress are charged to the respective qualifying project. All other borrowing costs, not eligible for inventorisation or capitalization are charged to revenue in the year in which they are incurred.

I. REVENUE RECOGNITION

i) Construction Contracts

In construction contracts, revenue is recognized on percentage of completion method. The revenue is recognized on the basis of the Accounting Standard and as prescribed by Institute of Chartered Accountants of India.

Revenue on sale of land is recognized upon enter in to contract with the customer in the purchase of the said undivided share of land. The revenue also recognized at the time of registration of sale deed or completion of the project whichever is earlier.

ii) Revenue from lease rentals and related income

Lease income is recognized on accrual basis as per the Contract.

iii) Interest Income

Interest is recognized on accrual basis of accounting.

iv) Dividend Income

Dividend income is recognized when the right to receive the same is established or the receipt of the same whichever is earlier.

J. FOREIGN EXCHANGE TRANSACTIONS

The foreign exchange transaction recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount, the prevailing exchange rate, as at the date of transaction.

K. TAXES ON INCOME

Tax expense comprises of current tax and deferred tax.

Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws that are enacted or substantially enacted.

Deferred Tax is recognized on timing differences, being the differences between taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward, only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. They can be realized against future taxable profits.

L. EMPLOYEE BENEFITS

Liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment and as required by law are recorded in accordance with Accounting Standard (AS)

15 (Revised) “Employee Benefits” issued by the Institute of Chartered Accountants of India.

i) Gratuity

Gratuity is a defined benefit plan. Liability for gratuity in respect of past services are provided for based on the actuarial valuation carried out annually as at the balanced sheet date by an independent actuary using the Projected Unit Credit (PUC) method.

ii) Provident Fund

The company''s contribution to Provident fund is considered as a defined contribution plan. Company''s contribution to provident fund is charged to the statement of profit and loss when the contribution is due.

M. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognized in respect of liabilities which can be measured only by using a substantial degree of estimation when:

a) the company has a present obligation as a result of past event;

b) a probable outflow of resources embodying economic benefits will be required to settle the obligation; and

c) the amount of obligation can be reliably estimated

Re-imbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

b) a possible obligation, that arises out of past events and the existence of which will be confirmed only by one or more uncertain future events unless the probability of outflow of resources is remote. Contingents assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.

N. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand and at bank and short-term investments with an original maturity of three months or less.

O. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue, share split and share warrants conversion.

Diluted earnings per share is calculated by adjusting net profit or loss for the period attributable to equity shareholders and the weighted number of shares outstanding during the period for the effect of all dilutive potential equity shares.

Source : Dion Global Solutions Limited
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