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SENSEX NIFTY India | Accounting Policy > Media & Entertainment > Accounting Policy followed by Reliance Broadcast Network - BSE: 533143, NSE: RBN

Reliance Broadcast Network

BSE: 533143|NSE: RBN|ISIN: INE445K01018|SECTOR: Media & Entertainment
, :
VOLUME 65,605
Reliance Broadcast Network is not traded in the last 30 days
Mar 12
Accounting Policy Year : Mar '13
a.  Basis of preparation
 The fnancial statements are prepared and presented under the historical
 cost convention on the accrual basis of accounting and in accordance
 with the Accounting Standards (AS'') as prescribed under the Companies
 (Accounting Standards) Rules, 2006, and the relevant provisions of the
 Companies Act, 1956 (the Act''), to the extent applicable.
 b.  Use of estimates
 The preparation of fnancial statements in conformity with generally
 accepted accounting principles (GAAP'') in India requires management to
 make estimates and assumptions that affect the reported amounts of
 assets and liabilities and the disclosures of contingent liabilities on
 the date of the fnancial statements. Actual results could differ from
 those estimates. Any revision to accounting estimates is recognised
 prospectively in current and future periods.
 c.  Fixed assets and depreciation/ amortisation
 i Tangible assets
 Tangible fxed assets are stated at cost less accumulated depreciation
 and any provision for impairment. Cost includes freight, duties, taxes
 (other than those recoverable from tax authorities) and other expenses
 related directly/indirectly to the acquisition / construction and
 installation of the fxed assets for bringing the asset to its working
 condition for its intended use.
 Depreciation on fxed assets is provided on the straight line method, at
 following rates which, in management''s opinion, refects the estimated
 useful lives of those fxed assets:
 Leasehold improvements are depreciated over the lower of the useful
 life of the asset and the lease term, on a straight line basis.
 Bus Queue Shelters under BOT Schemes are depreciated over the useful
 life being the contract period on uniform basis.
 Individual assets costing up to Rs. 5,000 are depreciated fully in the
 year of acquisition.
 ii Intangible assets
 Intangible assets, all of which have been acquired and are controlled
 through custody or legal rights, are capitalised at cost, where they
 can be reliably measured. Where capitalised, intangible assets are
 regarded as having a limited useful economic life and the cost is
 amortised over the lower of useful life and 10 years.  Application
 software purchased, which is not an integral part of the related
 hardware, is shown as intangible assets and amortised on a straight
 line basis over its useful life, not exceeding ten years, as determined
 by management.
 One Time Entry Fees paid for acquiring FM radio broadcasting licenses
 has been capitalised as an asset and is amortised over a period of ten
 years, being the period of the license, from the date of
 operationalisation of the station.
 Purchased goodwill is recognised by the Company on the basis of excess
 of purchase consideration paid over the value of the assets acquired at
 the time of acquisition and is amortised over its estimated useful life
 not exceeding fve years.
 d.  Impairment
 In accordance with AS 28  Impairment of Assets'', where there is an
 indication of impairment of the Company''s asset, the carrying amounts
 of the Company''s assets are reviewed at each balance sheet date to
 determine whether there is any impairment. The recoverable amount of
 the asset (or where applicable, that of the cash generating unit to
 which the asset belongs) is estimated as the higher of its net selling
 price and its value in use. An impairment loss is recognised whenever
 the carrying amount of an asset or a cash generating unit exceeds its
 recoverable amount. Impairment loss is recognised in the statement of
 proft and loss.
 Value in use is present value of estimated future cash fows expected to
 arise from the continuing use of the asset and from its disposal at the
 end of its useful life.
 e.  Investments
 Investments are classifed as long term or current based on intention of
 the management at the time of purchase.  Current investments are
 valued, scrip wise, at cost or fair value , whichever is lower.
 Long-term investments are carried at carrying cost less diminution in
 value which is other than temporary, determined separately for each
 individual investment.
 f.  Inventories
 Inventories are stated at lower of cost and net realisable value.
 Cost of Event / Content which does not create any rights are charged to
 the statement of proft and loss on exploitation.
 Event / Content cost covers the cost of acquisition/ execution of the
 award, function / concerts, cost of content like sports events, video
 albums etc.
 Cost of television programmes comprises of material, cost of services
 and other expenses.
 Pilot episodes are stated at cost. Pilots are written off after the end
 of one year from the year of production of respective pilot in case the
 same is not developed into a serial.
 Amortisation Policy for Event / Content Cost:
 In case rights are available in perpe tuity
 Costs of Annual Award/Concerts are amortised at 80% in the year of
 event execution and 20% in the subsequent year.
 Costs of Other Content are amortised at 60% in the year of commercial
 exploitation and 40% over the subsequent two years equally.
 g.  Share / Debenture Issue Expenses
 Share / Debenture Issue expenses are adjusted against securities
 premium account.
 h.  Employee benefts
 Short-term employee benefts are recognised as an expense at the
 undiscounted amount in the statement of proft and loss of the year in
 which the related service is rendered.
 The Company''s contribution to provident fund, which is a defned
 contribution scheme, is charged to the statement of proft and loss as
 Post employment and other long term employee benefts are recognised as
 an expense in the statement of proft and loss for the year in which the
 employee has rendered services.
 The expense is recognised at the present value of the amount payable
 determined using actuarial valuation carried out by an independent
 actuary at the balance sheet date using Projected Unit Credit Method.
 i.  Employee Stock Option Scheme (ESOS)
 The Employees Stock Option Scheme (the Scheme) provides for grant of
 equity shares of the Company to Directors (including whole time) and
 employees of the Company and its subsidiaries. The Scheme provides that
 employees are granted an option to acquire equity shares of the Company
 that vests in a graded manner. The options may be exercised within a
 specifed period. The Company follows the intrinsic value method to
 account for its stock  based employee compensation plans. Compensation
 cost is measured as the excess, if any, of the fair market price of the
 underlying stock over the exercise price on the grant date and is
 amortised over the vesting period of the option on a Straight Line
 The fair market price is the latest closing price, immediately prior to
 the date of the Board of Directors meeting in which the options are
 granted, on the stock exchange on which the shares of the Company are
 listed. If the shares are listed on more than one stock exchange, then
 the stock exchange where there is highest trading volume on the said
 date is considered.
 j.  Revenue recognition
 Revenue is recognised to the extent that it is probable that the
 economic benefts will fow to the Company and the revenue can be
 reliably measured. The amount recognised as revenue is net of trade
 discounts and service tax.
 Revenue from sale of airtime
 Revenue from Radio broadcasting is recognised on an accrual basis on
 the airing of the customers commercials, net of agency commission.
 Revenue from sale of telecast rights
 Revenue from sale of telecast rights of event and content is recognized
 on the date when the rights are made available to the assignee for
 Revenue from television programme
 Revenue from commissioned programmes are recognised as and when the
 relevant episodes of the programmes are delivered to the channels.
 Out of Home Media
 Advertising space revenue, net of taxes, rebate and discount is
 recognised on the display of advertisements over the period of the
 Revenue from Experiential Marketing
 Revenue from experiential marketing which includes event management and
 activations are recognised on the completion of the event and on the
 basis of related services performed, as per the contracted terms.
 Interactive Revenue
 Revenue from short code, short messaging service (SMS'') is recognised
 on acceptance of the hits by telecom operators.
 Management Fees
 Management fee is recognised as revenue on time proportion basis as per
 relevant agreements.
 Interest income
 Interest income is recognised on a time proportion basis.
 k.  License Fees
 As per the new Frequency Module (FM) broadcasting policy, effective 1
 April 2005 license fees are charged to revenue at the rate of 4% of
 gross revenue for the period or 10% of Reserve One Time Entry Fee
 (ROTEF) for the concerned city, whichever is higher. Gross Revenue for
 this purpose shall mean revenue on the basis of billing rates without
 deduction of taxes and agency commission and net of discounts to
 advertisers. Barter advertising contracts shall also be included in the
 gross revenue on the basis of relevant billing rates. ROTEF means 25%
 of highest valid bid in the city.
 l.  Foreign currency transactions
 Transactions denominated in foreign currency are recorded at the
 exchange rate prevailing on the date of the transactions.  Exchange
 differences arising on foreign exchange transactions settled during the
 year are recognised in the statement of proft and loss of the year.
 Monetary items are restated at the period ended rates. The exchange
 differences between the rate prevailing on the date of transaction and
 on settlement/restatement (other than those relating to acquisition of
 fxed assets) is recognised as income or expense, as the case may be.
 Non-monetary items which are carried at historical costs denominated in
 foreign currently are reported using the exchange rate at the date of
 the transaction.
 In respect of integral foreign operations of the company, fxed assets
 are translated at the rates on the date of acquisition, monetary assets
 and monetary liabilities are translated at the rate on the date of the
 balance sheet and income and expenditure are translated at the average
 of weekly average rates during the year.
 m.  Earning Per Share
 In determining earning per share, the company considers the net result
 after tax and includes the post tax effect of any extraordinary /
 exceptional item. The number of shares used in computing basic earning
 per share is the weighted average number of shares outstanding during
 the year. The number of shares used in computing diluted earning per
 share comprises the weighted average shares considered for deriving
 basic earnings per share and also the weighted average number of shares
 that could have been issued on the conversion of all dilutive potential
 equity shares unless the results would be anti-dilutive. Dilutive
 potential equity shares are deemed converted as of the beginning of the
 year, unless issued at a later date.
 n.  Taxation
 Tax expense comprises current tax expense computed in accordance with
 the relevant provisions of the Income Tax Act, 1961 and deferred tax
 charge or credit.
 Current tax provision is made based on the tax liability computed after
 considering tax allowances and exemptions, in accordance with the
 Income Tax Act, 1961. Deferred tax charge or credit and the
 corresponding deferred tax liability or asset is recognised for timing
 differences between the profts/ losses offered for income taxes and
 profts/ losses as per the fnancial statements. Deferred tax assets and
 liabilities are measured using the tax rates and tax laws that have
 been enacted or substantively enacted at the balance sheet date.
 Deferred tax assets are recognised only to the extent there is
 reasonable certainty that the assets can be realized in future.
 However, where there is unabsorbed depreciation or carried forward loss
 under taxation laws, deferred tax assets are recognised only if there
 is a virtual certainty of realisation of such assets. Deferred tax
 assets are reviewed as at each balance sheet date and written down/up
 to refect the amount that is reasonably/virtually certain (as the case
 may be) to be realized.
 o.  Provisions and contingencies
 Provisions comprise liabilities of uncertain timing or amount.
 Provisions are recognised when the Company recognizes it has a present
 obligation as a result of past events, it is more likely than not that
 an outfow of resources will be required to settle the obligation and
 the amount can be reasonably estimated.
 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 outfow of resources. When there is a possible obligation
 or a present obligation in respect of which the likelihood of outfow of
 resources is remote, no provision or disclosure is made.
 Loss contingencies arising from claims, litigation, assessment, fnes,
 penalties, etc. are recorded when it is probable that a liability has
 been incurred and the amount can be reasonably estimated.
 p.  Leases
 The Company has various operating leases, principally for radio
 stations, offce space and equipments with various renewal options.
 Substantially all operating leases are cancelable as well as renewable
 on expiry of lease term. Rental expense in agreements with scheduled
 rent increases is recorded on a straight-line basis as applicable over
 the lease term.
 q.  Borrowing costs
 Borrowing costs that are attributable to the acquisition, construction
 or production of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that necessarily takes a
 substantial period of time to get ready for its intended use. All other
 borrowing costs are charged to revenue.
Source : Dion Global Solutions Limited
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