Moneycontrol
Get App
SENSEX NIFTY
Moneycontrol.com India | Accounting Policy > Cement - Mini > Accounting Policy followed by Modi Cement - BSE: 518014, NSE: MODICEMENT
YOU ARE HERE > MONEYCONTROL > MARKETS > CEMENT - MINI > ACCOUNTING POLICY - Modi Cement

Modi Cement

BSE: 518014|NSE: MODICEMENT|SECTOR: Cement - Mini
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
Modi Cement is not traded in the last 30 days
Modi Cement is not traded in the last 30 days
Accounting Policy Year : Dec '05
1. SIGNIFICANT ACCOUNTING POLICIES
 
 a) System of Accounting
 
 i) Financial Statements are based on historical cost,, in accordance
 with applicable Accounting Principles in India, mandatory Accounting
 Standards issued by the Institute of Chartered Accountants of India and
 the relevant provisions of the Companies Act, 1956.
 
 ii) The Company follows mercantile system of accounting and recognises
 income and expenditure on accrual basis except those with significant
 uncertainties.
 
 b) Fixed Assets
 
 i) Fixed Assets are slated at cost of acquisition/installation, net of
 accumulated depreciation/amortisation. Cost is inclusive of duties (net
 of CENVAT), taxes, incidental expenses, erection/commissioning expenses
 and financial charges upto the date the asset is ready for its intended
 use.
 
 ii) Machinery spares which can be used only in connection with a
 particular item of fixed asset and the use of which is irregular are
 capitalised, at cost net of modvat/cenvat.
 
 c) Depreciation and Amortisation
 
 i) Premium on Leasehold land is amortised over the period of lease.
 
 ii) Depreciation on all assets is being provided on Straight Line
 Method in the manner and at the rates specified in Schedule XIV to the
 Companies Act, 1956 except for leasehold land. Continuous process
 plants have been considered on technical assessment and depreciation is
 provided accordingly.
 
 iii) Machinery spares which are capitalised are depreciated over the
 useful life of the related fixed asset.
 
 iv) Depreciation on increase/decrease in value of Fixed Assets due to
 foreign exchange fluctuations is provided on the basis of residual life
 of the asset.
 
 v) Assets of value not exceeding Rs.5000/- are fully depreciated in the
 year of purchase.
 
 d) Expenditure During Construction Period
 
 Expenditure (including financing cost relating to borrowed funds for
 construction or acquisition of fixed assets) incurred on projects under
 implementation are treated as Pre-operative expenses, pending
 allocation to the assets, and are shown under Capital Work in
 Progress, and the same are apportioned to fixed assets on commencement
 of commercial production.
 
 e) Investments
 
 Investments that 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 long-term. Current investments are
 carried at lower of cost or fair market value, determined on an
 individual investment basis. Long-term investments are carried at cost.
 Temporary diminution in the value of investments meant to be held for a
 long term is not recognised.
 
 f) Valuation of Inventories
 
 i) Inventories are valued at lower of cost and net realisable value.
 The cost is computed on First In First Out (FIFO) basis.
 
 ii) Cost for the purpose of valuation of Finished Goods and Material in
 process is computed on the basis of cost of .material, labour and other
 related overheads.
 
 iii) Scrap stock is valued at estimated realisable value.
 
 iv) Goods in transit are stated at costs accrued up to the date of
 Balance Sheet.
 
 g) Foreign Currency Transactions
 
 i) Initial Recognition
 
 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 of the
 transaction.
 
 ii) Conversion
 
 Foreign Currency monetary items are reported using the closing rate.
 Non-monetary items which are carried in terms of historical cost
 denominated in foreign currency are reported using the exchange rate at
 the date of the transaction; and non-monetary items which are carried
 at fair value or other similar valuation denominated in a foreign
 currency are reported using the exchange rates that existed when the
 values were determined.
 
 iii) Exchange Differences
 
 Exchange differences arising on the settlement/conversion of monetary
 items are recognised as income or as expenses in the year in which they
 arise except those relating to acquisition of fixed assets outside
 India, in which case such exchange differences are capitalised.
 
 The premium or discount arising at the inception of forward exchange
 contracts is amortised as expenses or income over the life of the
 contract. Exchange differences on such contracts are recognised in the
 statement of profit and loss in the year in which the exchange rates
 change. Any profit or loss arising on cancellation or renewal of
 forward exchange contract is recognised as income or as expense for the
 year.
 
 h) Revenue recognition
 
 i) Sales are recognised on despatch of goods to the customers, which
 normally results in transfer of title in the goods. Sales excludes self
 consumption of cement.
 
 ii) Export sales are accounted on the basis of dates of Bill of Lading.
 
 i) Site Restoration Expenses
 
 The Company provides for the expenditure to restore the quarries used
 for mining. The total estimate of restoration expenses is apportioned
 over the estimate of mineral reserves and a provision is made based on
 the minerals extracted during the year.
 
 Site restoration expenditure is incurred on an ongoing basis and until
 the closure of the mine. The actual expenses may vary based on the
 nature of restoration and the estimate of restoration cost.
 
 j) Employees' Retirement Benefits
 
 i) Retirement benefits namely Provident Fund and Pension Schemes etc.,
 are accounted on accrual basis and charged to Profit and Loss Account
 of the year,
 
 ii) Payment for present liability of future payment of gratuity is made
 to an approved Gratuity Fund, which fully covers the same under Cash
 Accumulation policy of Life Insurance Corporation of India,
 
 iii) Contribution in respect of employees covered under the
 Superannuation Scheme of the Company is being made to an approved
 Superannuation Fund, which fully covers the same under the policy of
 Life Insurance Corporation of India,
 
 iv) Provision for accrued leave encashment is made on the basis of
 actuarial valuation.
 
 k) Miscellaneous Expenditure
 
 Items included in the Miscellaneous Expenditure including payments made
 on account of Voluntary Retirement Scheme are treated as Deferred
 Revenue Expenditure and are amortised over a period of five years.
 
 l) Borrowing Costs
 
 Borrowing costs incurred in relation to the acquisition and
 construction of assets are capitalised as a part of the cost of such
 assets upto the date when such assets are ready for intended use. Other
 borrowing costs are charged as an expense in the year in which these
 are incurred.
 
 m) Leases
 
 Assets subject to operating leases are included in fixed assets. Lease
 income is recognised in the Profit and Loss Account over the lease
 term. Costs, including depreciation are recognised as an expense in the
 Profit and Loss Account. Initial direct costs such as legal costs,
 brokerage costs, etc. are recognised immediately in the Profit and Loss
 Account.
 
 n) Taxation
 
 i) Provision for current tax is made on the basis of estimated taxable
 income for the current accounting year in accordance with the Income
 Tax Act, 1961.
 
 ii) Deferred income tax reflects the impact of timing differences
 between taxable income and accounting income for the year and reversal
 of timing differences of earlier years. Deferred tax is measured based
 on the tax rates and the tax laws enacted or substantially enacted at
 the balance sheet date. Deferred tax assets (including unrecognised
 deferred tax assets of earlier years) are recognised only to the extent
 there is reasonable certainty or virtual certainty, as applicable, that
 sufficient future taxable income will be available against which such
 deferred tax assets can be realised.
 
 o) Impairment
 
 i) Fixed assets are reviewed at each balance sheet date for impairment,
 in case events and circumstances indicate any impairment, upon which
 recoverable amount of the fixed assets is determined. An impairment
 loss is recognised, whenever the carrying amount of assets either
 belonging to Cash Generating Unit (CGU) or otherwise exceeds
 recoverable amount.  The recoverable amount is the greater of assets
 net selling price or its value in use. In assessing value in use, the
 estimated future cash flows from the use of the assets are discounted
 to their present value at appropriate rate. An impairment loss is
 reversed if there has been change in the recoverable amount and such
 loss either no longer exists or has decreased. Impairment loss/reversal
 thereof is adjusted to the carrying value of the respective assets,
 which in case of CGU, are allocated to its assets on a pro-rata basis.
 
 ii) After impairment, depreciation is provided on the revised carrying
 amount of the assets over its remaining useful life.
 
 p) Provision
 
 A provision is recognised when an enterprise has a present obligation
 as a result of past event and it is probable that an outflow of
 resources will be required to settle the obligation, in respect of
 which a reliable estimate can be made. Provisions are not discounted to
 its present value and are determined based on management estimate
 required to settle the obligation at the balance sheet date. These are
 reviewed at each balance sheet date and adjusted to reflect the current
 management estimates.
 
 q) Contingencies
 
 Liabilities which are material and whose future outcome cannot be
 ascertained with reasonable certainty, are treated as contingent and
 disclosed by way of notes to the accounts.
Source : Dion Global Solutions Limited
Quick Links for modicement
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.