GAMMON INDIA LIMITED

Franco Tosi Meccanica S.p.A.
5. NOTES TO THE ACCOUNTING FORMATS
5.1 Balance sheet formats, accounting standards, and reference criteria for, assessment
5.1.1 Balance sheets format
The format adopted to prepare the balance sheet contains the distinction of assets and liabilities
between current and non-current.
The profit and loss format adopted contains the costs classification by type, taking into account the
activity carried out.
5.1.2 Accounting standards and reference criteria for assessment
NON-CURRENT ASSETS AND LIABILITIES
Intangible assets
The intangible assets are measured at cost, net of the corresponding quotas of amortization and of the
impairment loss.
Amortization is determined on the basis of the expected useful life and it begins when the asset is
available for use, i.e. when it is operating according to corporate policy, and ceases when the asset is
classified as held for sale or when the carrying amount has declined to zero.
Intangible assets of infinite useful lives are not amortized but subject to impairment test, on an annual
basis.
- Costs of research and development
The costs of research are charged at the moment they are borne.
The costs for development in relation to a specific project are capitalized only when the Company is
able to show the technical possibility of carrying out the intangible asset in order to make it available
for use and sale, its intention to make it available for use and sale, the modalities the activity can
provide for future economic benefits, the availability of technical, financial, as well as any other kind
of resources in order to carry out development and its capacity to reliably assess the cost attributable to
the activity during its development.
After the original recognition, the costs of development are assessed net of the corresponding quotas
of amortization and of the impairment loss. Further capitalized costs for development are amortized
with reference to the period of time where it is expected that the project thereof will produce revenue
for the company.
F
79
6/26