906Annual Report 2008-09.pdf - Hindusthan National Glass ...

Schedules forming part of the Accounts
Schedule – S ACCOUNTING POLICIES AND NOTES ON ACCOUNTS (Contd.)
exchange differences on settlement of the foreign currency transaction during the year are recognised as income or expenses in the
Profit and Loss Account.
Exchange differences arising with respect to forward contracts other than those entered into, to hedge foreign currency risk on
unexecuted firm commitments or of highly probable forecast transactions are recognised in the period in which they arise and the
difference between the forwards rate and exchange rate at the date of transaction is recognised as income/expense over the life of
the contract.
Keeping in view the announcement of “The Institute of Chartered Accountants of India” dated March 29, 2008 regarding accounting
for derivatives, mark to market losses on all other derivatives contracts (other than forward contracts dealt as above) outstanding
as at the year end, are recognised in the accounts.
i. Revenue Recognition
i) All Expenses and Incomes are accounted for on mercantile basis except otherwise stated.
ii)
Income from Export Incentives, Insurance and other claims etc. is recognised on the basis of certainties as to its utilisation and
related realisation.
iii) Sales are inclusive of Packing Charges and Excise Duty but exclusive of Value Added Tax, Rebates, Discounts, and Claims etc.
j. CENVAT / Value Added Tax (VAT) Credit
Cenvat / VAT credit whenever availed on Fixed Assets is set off with the cost of the assets. Other Cenvat / VAT credit wherever availed
is adjusted with the cost of purchases of Raw Material or Stores as the case may be.
k. Employee Benefits
Employee Benefits are accrued in the year services are rendered by the employees. The Company has Defined Contribution Plan for its
employees comprising of Provident Fund and Pension Fund. The Company makes regular contribution to Provident Fund which are
fully funded and administered by the Trustees / Government. The Company contributes to the Employees’ Pension Scheme, 1995
for certain categories of employees. Contributions are recognised in the Profit and Loss account on accrual basis.
Long-term employee benefits under defined benefit scheme such as gratuity, leave encashment etc. are determined at the close of
each year at the present value of the amount payable using actuarial valuation techniques.
Actuarial gains and losses are recognised in the year when they arise.
l. Research and Development
Revenue Expenditure on Research and Development is charged to the Profit and Loss Account in the year in which it is incurred.
m. Subsidies and Grants
Cash Subsidy related to Fixed Assets to the extent received is adjusted to the cost of respective fixed assets. Subsidy related to the
total investment in the project is treated as Capital Reserve. Other Government grants including incentives etc. are credited to Profit
and Loss Account or deducted from the related expenses.
n. Borrowing Cost
Borrowing costs that are attributable to the acquisition/construction of Fixed Assets are capitalised as part of the cost of respective
assets. Other borrowing costs are recognised as an expense in the year in which they are incurred.
o. Income Tax
Provision for Tax is made for current tax, deferred tax and fringe benefit taxes. Current tax is provided on the taxable income using
the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing difference, which are capable
of reversal in subsequent periods are recognised using tax rates and tax laws, which have been enacted or substantively enacted.
Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets will be realised. In case of carry forward of unabsorbed depreciation and tax losses,
deferred tax assets are recognised only if there is “virtual certainty” that such deferred tax assets can be realised against future
taxable profits.
p. Lease
Where the Company is the lessee, finance leases, which effectively transfer to the Company substantially all the risks and benefits
incidental to ownership of the leased item, are capitalised at the lower of the fair value and present value of the minimum lease
payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance
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