Elpitiya Plantations Plc Annual Report 2010/11 - Colombo Stock ...

Notes to the Financial Statements
Year Ended 31 st March 2011
During the period of development, the assets is tested for impairment annually, Following the initial recognition of the
development expenditure, the cost model is applied requiring the assets to be carried at cost less any accumulated amortisation
and accumulated impairment losses . Amortisation of the assets begins when development is complete and the asset is
available for use. It is amortised over the period of expected future sales. During the period of which the asset is not yet in uses
it is tested for impairments annually.
2.3.5 Deferred Expenditure
Expenditure which is deemed to have a benefit or relationship to more than one financial year is classified as deferred
expenditure. Such expenditure is written off over the period to which it relates, on a straight-line basis.
2.3.6 Inventories
Inventories other than produce stocks are valued at the lower of cost and estimated net realisable value, after making due
allowances for obsolete and slow moving items. Net realisable value is the price at which Inventories can be sold in the
ordinary course of business after allowing for cost of realisation and / or cost of conversion from their existing state to saleable
condition.
The cost incurred in bringing inventories to its present location and condition are accounted using the following cost formula.
Input Material
At average cost.
Growing Crop-Nurseries
At the cost of direct materials, direct labour and an appropriate proportion of directly
attributable overheads.
Produce Stocks
Valued at estimated selling prices or since realised prices.
Consumables & Spares
At actual cost.
2.3.7 Trade and Other Receivables
Trade receivables are stated at the amounts they are estimated to realise net of provisions for bad and doubtful receivables.
Other receivables and dues from related parties are recognised at cost less provision for bad and doubtful receivables.
2.3.8 Cash and Cash Equivalents
Cash and Cash Equivalents are defined as cash in hand, demand deposits and short term highly liquid investments readily
convertible to known amounts of cash and subject to insignificant risk of changes in value.
For the purpose of Cash Flow Statement Cash and Cash Equivalents consist of cash in hand and deposits in banks net of
outstanding bank overdrafts. Investments with short term maturities i.e. three months or less from the date of acquisitions are
also treated as Cash Equivalents.
Interest paid is classified as operating Cash Flows.
The Cash Flow Statement is reported based on indirect method.
2.3.9 Property, Plant and Equipment
a) Cost
Property, Plant & Equipment is recorded at cost less accumulated depreciation and less any impairment in value.
32
Elpitiya Plantations Plc Annual Report 2010/11