Annual Report 2008-2009 - Gammon India

Annual Report 2008-2009
8.
Unit Credit Method.
Actuarial gains/losses are immediately taken to Profit and Loss Account and are not deferred.
Fixed Assets and Depreciation:
Fixed Assets are valued and stated at cost of acquisition less accumulated depreciation thereon. Revalued
assets are stated at the revalued amount. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition of its intended use.
Depreciation for the accounting period is provided on:
(a) Straight Line Method, for assets purchased after 2-4-1987, at the rates and in the manner specified in
Schedule XIV to the Companies Act, 1956
(b) Written Down Value Method, for assets acquired on or prior to 2-4-1987, at the rates as specified in Schedule
XIV to the Companies Act, 1956.
(c) Depreciation on revalued component of the assets is withdrawn from the Revaluation Reserve.
(d) The depreciation on assets used for construction has been treated as period cost.
(e) Depreciation on assets situated in countries outside India are accounted at the rates of depreciation
prescribed as per the relevant local laws of such countries which are as follows except in case of Oman
Branch where the depreciation is as per Schedule XIV.
Assets Category Kenya Nigeria Algeria
Computers 30% - 15%
Furniture and Fittings 12.50% 10% 15%
Plant and Machineries - 15% 15%
Office Equipments - 15% 15%
Electrical fittings - 15% -
SPC Tools - - 15%
Vehicles - - 20%
Building/Store Cabin - - 5%
(f) Intangible assets are amortised uniformly over three years.
9. Impairment of Assets:
On annual basis Company makes an assessment of any indicator that may lead to impairment of assets. An
asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount
is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as
impaired.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate
of recoverable amount.
10. Investments:
Investments are classified as current and long term investments. Current Investments are valued at lower of cost
or market value. Long Term Investments are stated at cost. The decline in the value of long term Investments,
other than temporary, is provided for.
11. Inventories:
a) Stores and Construction Materials are valued and stated at lower of cost or net realisable value. The FIFO
method of inventory valuation is used to determine the cost.
b) Work-in-Progress on construction contracts reflects value of material inputs and expenses incurred on
contracts including estimated profits in evaluated jobs.
c) Raw materials are valued at cost, net of Excise Duty and Value Added Tax, wherever applicable. Stores and
spares, loose tools are valued at cost except unserviceable and obsolete items that are valued at estimated
realizable value thereof. Costs are determined on FIFO method.
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