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EVEREST KANTO CYLINDER LIMITED
v. Accounting of foreign branch (integral foreign
operation):
- Monetary assets and liabilities are converted
at the appropriate rate of exchange
prevailing on the Balance Sheet date;
- Fixed assets and depreciation thereon are
converted at the exchange rates prevailing
on the date of the transaction.
- Revenue items are converted at the rate
prevailing on date of the transaction.
F. Fixed Assets and Depreciation / Amortisation:
a. Fixed Assets:
Fixed Assets are carried at cost of acquisition /
construction or at revalued amounts less accumulated
depreciation and amortisation. Cost of acquisition
includes taxes / duties (net of credits availed) and other
attributable costs for bringing assets to the condition
required for their intended use.
b. Depreciation / Amortisation:
i. Cost of Leasehold Land is amortised over the
period of the lease;
ii. Intangible assets are amortized on a Straight Line
basis over the estimated useful life of the
respective asset, not exceeding a period of ten
years;
iii. Depreciation on other assets is provided as per
the Straight Line method at the rates permissible
under applicable local laws;
iv. Cost of Customised software capitalized is
amortised over a period of five years.
G. Investments:
Investments are classified into Current and Long-term
Investments. Current Investments are stated at lower of cost
and fair value. Long-term Investments are stated at cost. A
provision for diminution is made to recognise a decline other
than temporary in the value of Long-term Investments.
H. Inventory Valuation:
a. The inventories resulting from intra-group transactions
are stated at cost after deducting unrealised profit on
such transactions.
b. Goods in transit are stated 'at cost'.
c. Other inventories are stated 'at cost or net realisable
value', whichever is lower.
d. Cost comprises all costs incurred in bringing the
inventories to their present location and condition. Cost
formulae used are either 'average cost', 'first-in-firstout'
or ‘specific identification’ as applicable.
I. Taxation:
Income-tax expense comprises Current tax, Fringe Benefit
Tax and Deferred tax charge or credit.
a. Provision for current tax is made on the assessable
income at the tax rate applicable to the relevant
assessment year.
b. Provision for Fringe Benefit Tax is made on the fringe
benefits provided / deemed to have been provided
during the year at the rates and the values applicable
to the relevant assessment year.
c. Deferred Tax is recognized on timing difference
between taxable income and accounting income that
originated in one period and are capable of reversal in
one or more subsequent period(s). The Deferred tax
Asset and Deferred tax Liability is calculated by
applying tax rate and tax laws that have been enacted
or substantively enacted by the Balance Sheet date.
Deferred tax Assets arising on account of brought
forward losses and unabsorbed depreciation under tax
laws are recognised only if there is a virtual certainty of
its realisation supported by convincing evidence.
Deferred tax assets on account of other timing
differences are recognised only to the extent there is a
reasonable certainty of its realisation. At each Balance
Sheet date the carrying amount of deferred tax assets
are reviewed to reassure realisation.
J. Borrowing Costs:
Interest and other borrowing costs attributable to acquisition /
construction of qualifying assets are capitalised as part of the cost
of such assets upto the date the assets are ready for their intended
use. Other borrowing costs are charged as expense in the year in
which these are incurred.
K. Impairment of Assets:
The carrying amounts of assets are reviewed at each
Balance Sheet date to assess whether there is any indication
that an individual asset / group of assets (constituting a Cash
Generating Unit) may be impaired. If there is any indication
of impairment based on internal / external factors i.e. when
the carrying amount of the assets exceed the recoverable
amount an impairment loss is charged to the Profit and Loss
Account in the year in which an asset is identified as impaired.
An impairment loss recognized in prior accounting periods
is reversed or reduced if there has been a favourable change
in the estimate of the recoverable amount.
L. Government Grants:
Government grants received to meet the costs of specific
fixed assets, are recognised as a reduction in the cost of the
respective asset. Revenue grants are recognised in the Profit
and Loss Account on a systematic basis so as to match the
related costs.
M. Expenditure During Construction and Expenditure on New
Projects:
In case of new projects and in case of substantial
modernization / expansion at existing units of the Company,
expenditure incurred prior to commencement of commercial
production is capitalised.
Annual Report 2010-11 Schedules forming part of Consolidated Financial Statements
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