INDIAN RAYON AND INDUSTRIES LIMITED - Aditya Birla Nuvo, Ltd

Schedules
SCHEDULE ‘19’
SIGNIFICANT ACCOUNTING POLICIES AND
NOTES ON BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
A. SIGNIFICANT ACCOUNTING POLICIES
• ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention (except for certain fixed assets which have been revalued),
on an accrual basis and in accordance with the applicable accounting standards.
• FIXED ASSETS
Fixed assets are stated at cost adjusted by revaluation in case of certain land and buildings.
• DEPRECIATION/AMORTISATION
Depreciation on Fixed Assets (including revalued assets) is provided on Straight Line Method at the rates and in the manner specified
in Schedule XIV to the Companies Act, 1956. “Continuous process plants” have been classified on technical assessment and depreciation
provided accordingly.
Depreciation on the Fixed Assets added/disposed off/discarded during the year has been provided on pro-rata basis with reference to
the month of addition /disposal/discarding.
Depreciation on the amounts capitalised during the year on account of foreign exchange fluctuation is provided prospectively over
residual life of the assets.
Intangible and certain other assets are amortised as under :
Goodwill - Not amortised
Trademarks / Brands - 15 years
Capital Expenditure on assets not owned - 5 years
Leasehold Land - Over the period of the lease
• TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange in force at the date of transactions.
Foreign currency assets and liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year
end and resultant gains/losses are recognised in the Profit and Loss Account. Premium in respect of forward foreign exchange
contracts is recognised over the life of the contracts.
Foreign currency loans for financing fixed assets are stated at the contracted/prevailing rate of exchange at the year end and the
resultant gains / losses are adjusted to the cost of assets.
• INVESTMENTS
Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the value.
Current Investments are stated at lower of cost and market/ fair value.
• INVENTORIES
Inventories are valued at the lower of the cost and estimated net realisable value.
Cost of inventories is computed on a weighted average / FIFO basis.
Finished goods and work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present
location and condition.
Proceeds in respect of sale of raw materials / stores are credited to the respective heads.
• GRATUITY/LEAVE ENCASHMENT
Provision / Contribution to gratuity fund and provision for leave encashment are made on the basis of actuarial valuation.
• RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure is charged to the Profit and Loss Account and Capital expenditure is added to the cost of Fixed Assets in the
year in which it is incurred.
• GOVERNMENT GRANTS
Revenue grants are recognised in the Profit and Loss Account. Capital grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
• MISCELLANEOUS EXPENDITURE
Marketing/Technical know-how expenses are defered and are written-off over a period of five year.
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