Annual Report cb smile - Jet Airways

Significant Accounting Policies and Notes forming part of Consolidated Accounts (contd.)
J. DEPRECIATION / AMORTISATION:
a) Depreciation on tangible fixed assets has been provided at the rates and in the manner prescribed under the
schedule XIV to the Companies Act, 1956 on Written Down Value method, other than Narrow and Wide Body
aircraft which are depreciated on Straight Line method. Expenditure incurred on improvements of assets
acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold
land is amortised over the period of lease.
b) On amounts added on revaluation, depreciation is charged over the residual life and the additional charge of
depreciation is withdrawn from the Revaluation Reserve.
c) Intangible assets are amortised on straight line basis as follows.
i) Landing Rights acquired are amortised over a period not exceeding 20 years. Amortization period exceeding
10 years is applied considering industry experience and expected asset usage.
ii) Trademarks are amortised over 10 years.
iii) Computer Software is amortised over a period not exceeding 36 months.
K. INVESTMENTS:
Current Investments are carried at lower of cost and quoted / fair value. Long Term Investments are stated at cost.
Provision for diminution in the value of long term investments is made only if such a decline is other than
temporary.
L. BORROWING COSTS:
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the
cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for
intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.
M. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION:
a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
Monetary items are restated at the period-end rates.
b) In case of holding company the exchange difference between the rate prevailing on the date of transaction
and on the date of settlement / restatement (other than those relating to long term foreign currency monetary
items) is recognized as income or expense, as the case may be. Exchange differences relating to long term
foreign currency monetary items, to the extent they are used for financing the acquisition of fixed assets are
added to or subtracted from the cost of such fixed assets and in other cases accumulated in ‘Foreign Currency
Monetary Item Translation Difference Account’ and amortized over the balance term of the long term monetary
item or 31st March, 2011 whichever is earlier.
c) In case of subsidiary company the exchange difference between the rate prevailing on the date of transaction
and on the date of settlement as also on translation of monetary items at the end of the year including those
relating to long term foreign currency monetary items is recognised as income or expense, as the case may be.
d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of
monetary items, the difference between the exchange rate on the date of such contracts and the year end rate
is recognized in the Profit and Loss Account. Any profit / loss arising on cancellation of forward exchange
contract is recognized as income or expense of the year. Premium / discount arising on such forward exchange
contracts is amortised as income / expense over the life of contract.
N. INVENTORIES:
Inventories are valued at cost or Net Realisable Value (NRV) whichever is lower. Cost of inventories comprises of
all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost
is determined using the Weighted Average formula. In respect of reusable items such as rotables, galley equipment
and tooling etc., NRV takes into consideration provision for obsolescence and wear and tear based on the estimated
useful life of the aircraft derived from Schedule XIV of the Companies Act, 1956 and also provisioning for non –
moving / slow moving items.
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