Annual Report cb smile - Jet Airways

Significant Accounting Policies and Notes to Accounts (contd.)
K. 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.
L. 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. The exchange difference between the rate prevailing on
the date of transaction and on settlement/restatement (other than those relating to long term foreign currency
monetary items) is recognised as income or expense, as the case may be.
b) 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 amortised
over the balance term of the long term monetary item or 31 st March, 2011 whichever is earlier.
c) 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 period 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.
M. 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.
N. AIRCRAFT MAINTENANCE & REPAIRS COST :
Aircraft Maintenance, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed on
incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement
and these are accounted in accordance with the relevant terms.
O. TAXES :
Provision for current tax is made after taking into consideration benefits admissible under the provisions of the
Income Tax Act, 1961.
Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates
and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is
recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be,
that the asset will be realised in future.
P. SHARE ISSUE EXPENSES :
Issue Expenses are adjusted against the Share Premium Account.
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