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Moneycontrol.com India | Accounting Policy > Diamond Cutting & Jewellery & Precious Metals > Accounting Policy followed by Tara Jewels - BSE: 534756, NSE: TARAJEWELS
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Tara Jewels

BSE: 534756|NSE: TARAJEWELS|ISIN: INE799L01016|SECTOR: Diamond Cutting & Jewellery & Precious Metals
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Tara Jewels is not traded in the last 30 days
Mar 15
Accounting Policy Year : Mar '16

1. BASIS OF ACCOUNTING

The financial statements are prepared under historical cost convention, on going concern concept and in compliance with the Accounting Standards as prescribed under section 133 of the Companies Act, 2013 (the Act) read with Rule 7 of the Companies (Accounts) Rules, 2014. The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis to the extent measurable and where there is certainty of ultimate realization in respect of incomes. Accounting policies not specifically referred to otherwise, are consistent and in consonance with the generally accepted accounting policies.

2. INVENTORIES

Inventories are valued at cost or net realizable value, whichever is less. Cost of raw materials and stores, consumables and packing material are determined on weighted average basis. Cost of Work in progress and finished goods comprises of raw material cost & appropriate overheads incurred for bringing them to their present condition.

Traded goods are valued at the cost or net realizable value whichever is less and cost is determined on first-in-first-out basis.

3. FIXED ASSETS

(a) Tangible assets

Tangible Fixed Assets are stated at cost, inclusive of incidental expenses related thereto less accumulated depreciation.

(b) Intangible assets

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment. Internally generated intangible assets, excluding development cost, are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the intangible and the costs can be measured reliably.

Intangible assets mainly include Goodwill on Amalgamation and Computer Software. Cost of software includes license fees and implementation / integration expenses.

4. DEPRECIATION

(a) Depreciation on tangible fixed assets is provided on the written-down-value method based on useful life of the assets as prescribed in Schedule II of the Act, except in respect of certain plant and machinery, where useful life different than those prescribed in Schedule II, is based on technical assessment.

(b) Depreciation on additions/ deletions to fixed assets is calculated pro-rata from/ up to the date of such additions/ deletions.

(c) Building on leasehold land is amortized on straight-line basis over the primary period of lease.

(d) Leasehold Improvements are amortized over the primary period of lease.

(e) Computer software is amortized over the period of five years.

(f) Goodwill on Amalgamation is written off over the period of five years.

5. BORROWING COST

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs that are attributable to the acquisition or Construction of a qualifying asset are capitalized as part of cost of such asset till such time as the asset is ready for its intended use. Other borrowing costs are recognized as expense for the period.

6. REVENUE RECOGNITION

(a) Domestic sales are recognized on dispatch to customers.

(b) Revenue from export sales is recognized when the significant risks and rewards of ownership are transferred to the customer, which is based upon the terms of the applicable contract.

(c) Service Income is recognized as per the terms of contract with customers when the related services are performed.

(d) Dividends are accounted for when the right to receive dividend is established.

(e) Income from Interest on deposits, Loans and Interest bearing securities is recognized on time proportionate method.

7. EXCISE DUTY

Excise duty is accounted on the basis of payments made in respect of goods cleared and provisions made for goods lying in bonded warehouses.

8. FOREIGN CURRENCY TRANSACTIONS

(a) 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 recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost.

(b) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period.

(c) Any profit or loss arising on settlement or cancellation of other derivative contracts (forward contracts in respect of firm commitments and highly probable forecast transactions, swaps and currency options) is recognized as income or expense for the period. Pursuant to The Institute of Chartered Accountants of India''s announcement ''Accounting for Derivatives'', the Company marks-to-market all such outstanding derivative contracts at the year-end and the resulting mark-to-market losses, if any, are recognized in the Statement of Profit and Loss.

9. INVESTMENTS

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis.

Investment other than current investments, are classified as long-term investments and are stated at cost. Provision for diminution in value of Long term investments is made only if such a decline is other than temporary.

10. CASH AND CASH EQUIVALENTS

Cash and cash equivalent for the purpose of cash flow statement comprise cash in hand and cash at bank, cheques in hand and fixed deposits with maturity of three months or less.

11. CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

12. ACCOUNTING ESTIMATES

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known materialized.

13. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue that have changed the number of equity shares outstanding, without a corresponding change in the resources.

For the purpose of calculating diluted earnings per share, the net profits for the period attributable to equity shareholders and weighted average number of shares outstanding during the period are adjusted for the effects of all potential equity shares.

14. EMPLOYEE BENEFITS

(a) Defined Contribution Plans

The Company contributes on a defined contribution basis to Employee''s Provident Fund and Employee''s State Insurance Fund towards post employment benefits, both are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

(b) Defined Benefit Plans

The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognized in the Statement of Profit and Loss. Gratuity Fund is recognized by the income tax authorities and is administered through trustees. The Company has taken a Group Gratuity Policy with Life Insurance of India.

(c) Employee Leave Entitlement

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Statement of Profit and Loss.

15. STOCK BASED COMPENSATION

The compensation cost of stock options granted to employees is measured by the intrinsic value method. The compensation cost, if any, is amortized uniformly over the vesting period of the option.

16. TAXES ON INCOME

(a) Current Year Income Tax:

Provision for current tax is made considering various allowances and benefits available to the Company under the provisions of Income Tax Act, 1961.

(b) Deferred Income Tax:

In accordance with Accounting Standard AS-22 Accounting for Taxes on Income, deferred tax resulting from timing differences between book and tax profits are accounted for at tax rate substantially enacted by the Balance Sheet date to the extent the timing differences are expected to be crystallized. Deferred tax assets or liabilities relating to the timing differences arising and reversing during the tax holiday period under Section 10A of the Indian Income Tax Act, 1961, are not recognized.

Deferred Tax Assets arising on account of carried forward losses and unabsorbed depreciation as per Income Tax Act, 1961 are recognized to the extent there is a virtual certainty supported by convincing evidence that such assets will be realized.

(c) Minimum Alternative Tax (MAT) Credit:

MAT paid in accordance to the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.

17. LEASES

Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor, are recognized as operating lease. Lease rental under operating lease are charged off to the Statement of Profit and Loss as incurred.

18. 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 Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

19. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognizes a provision 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.

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 but the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent Assets are neither recognized nor disclosed.

Source : Dion Global Solutions Limited
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