2003-2004 - Cgglobal.com

Crompton Greaves Ltd.
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SCHEDULE [ A ] (Contd.)
5 FOREIGN CURRENCY TRANSACTIONS
(a) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.
(b) Foreign currency current assets and liabilities are converted at the contracted / year end rate, as
applicable.
(c) Exchange difference on account of acquisition of fixed assets are adjusted to carrying cost of fixed
assets. Other exchange differences are adjusted in the Profit & Loss Account.
(d) The cost of forward exchange contracts is spread over the period of the contract.
6 REVENUE RECOGNITION
Revenues from sales and services is recognised in terms of contract with customers. Revenues from
construction contracts is recognised based on percentage completion after providing for expected losses.
7 RETIREMENT BENEFITS
(a) Provident fund and superannuation contributions are accrued each year in terms of contracts with the
employees.
(b)
Provisions for gratuity and leave encashment are determined and accrued on the basis of actuarial
valuation.
8 DEPRECIATION
(a)
(b)
(c)
(d)
(e)
Depreciation on the fixed assets is provided at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, on written down value method other than on buildings and plant and
equipment which are depreciated on a straight line method.
Building constructed on leasehold land are depreciated at normal rate as prescribed in Schedule XIV
of the Companies Act, 1956 where the lease period of land is beyond the life of the building.
Lumpsum amounts paid for leasehold land are amortised and charged to depreciation over the
primary lease periods except where the option of refund is available.
In the case of revalued assets the difference between the depreciation based on revaluation and the
depreciation charged on historical cost is recouped out of revaluation reserve.
The intangible assets are amortised over its estimated useful life.
9 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 an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale. All other borrowing costs are
recognised as expense in the period in which they are incurred.
10 TAXES ON INCOME
(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax
credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the
expected outcome of assessments / appeals.
(b) Deferred tax is recognised on timing difference between the accounting income and the estimated
taxable income for the period and quantified using the tax rates and laws enacted or substantively
enacted on the balance sheet date.
(c) Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation
are recognised and carried forward only to the extent that there is virtual certainty supported by
convincing evidence that sufficient future taxable income will be available against which such deferred
tax assets can be realised.
11 CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
(a)
(b)
Accounting for contingencies (gains and losses) arising out of contractual obligations, are made only
on the basis of mutual acceptances.
Where material events occurring after the date of balance sheet are considered upto the date of
approval of the accounts by the Board of Directors.