NAVANA REAL ESTATE LIMITED - Dhaka Stock Exchange

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Issuer: Navana Real Estate LimitedIssue Manager: ICB Capital Management Limitedthe assets to its working condition for its intended use. Expenditure incurred after theassets have been put into operation, such as repairs and maintenance is normallycharged off as revenue expenditure in the period in which it is incurred. In situationwhere it can be clearly demonstrated that the expenditure has resulted in an increase inthe future economic benefit expected to be obtained from the use of the fixed assets,the expenditure is capitalized as an additional cost of the assets.There is no intangible asset and the fixed assets do not include any assets held underlease.On retirement or otherwise disposal of fixed assets, the cost and accumulateddepreciation are eliminated and any gain or loss on such disposal is reflected in theincome statement which is determined with reference to the net book value of assetsand the net sales proceeds.2.10 Depreciation of property, plant & equipmentNo depreciation has been charged on the office space considering value appreciationtaken place in every year.Depreciation on all other fixed assets is computed using the reducing balance methodso as to write off the assets over their expected useful life.Full year’s depreciation has been charged on additions irrespective of the date when therelated assets are put into use and no depreciation is charged on retirement,irrespective of date of retirement.After considering the useful life of assets as per BAS-16, the annual depreciation rateshave been applied as under which is considered reasonable by the management.2.11 Investment propertyInvestment property, which is property held to earn rentals and/or for capitalappreciation (including property under construction for such purposes), is measuredinitially at its cost, including transaction costs. Subsequent to initial recognition,investment property is measured at fair value. Gains and losses arising from changes inthe fair value of investment property are included in profit or loss in the period in whichthey arise.2.12 InventoriesInventories represents stock of land, construction materials and construction work inprogress in the ordinary course of business within the company’s normal operatingcycles.a) Stock of land has been valued at cost. Cost includes the purchase consideration,government duties related to purchase, land filling, wages and other directexpenses related to development;b) Stocks of construction materials and construction works in progress have beenvalued at cost.2.13 Impairment of assetsAn asset is impaired if its recoverable amount is below the value currently shown on thestatement of financial position. Recoverable amount is taken as the higher of:a) fair value less cost to sell (net selling price), andb) value in useAt each statement of financial position, the company reviews all assets to look for anyindication that an asset may be impaired as per BAS 36. Based on such reviewmanagement considers that no indication of impairment for any assets existed on thestatement of financial position date.2.14 ProvisionsIn accordance with the guidelines as prescribed by BAS-37: Provisions, contingentliabilities and contingent assets, provisions are recognized in the following situations:Page- 34
Issuer: Navana Real Estate LimitedIssue Manager: ICB Capital Management Limited2.15 Taxationa) when the company has an obligation (legal or constructive) as a result of pastevents;b) when it is probable that an outflow of resources embodying economic benefitswill be required to settle the obligation; andc) reliable estimates can be made of the amount of the obligation.a) Current taxThe company is to pay income tax @ Taka 250/- per square meter for apartments soldin the financial year 2009-2010 and @ Tk. 2,000/- per square meter in case of buildingor apartments situated at Gulshan Model Town, Banani, Baridhara, Defense OfficersHousing Society (DOHS), Dhanmondi R/A, Lalmatia Housing Society, Uttara ModelTown, Bashundhara Residential Area, Dhaka Cantonment Area, Motijheel C/A, DilkushaC/A, Karwan Bazar C/A of Dhaka and Khulsi R/A, Panchlaish R/A and Agrabad ofChittagong and in other than areas mentioned above @ Tk. 800/- per square meter forapartments sold in the financial year 2010-2011 at the time of registration as full andfinal settlement of company’s tax liability.The company is to pay income tax @ 1% on deed value U/S 53H of the Income TaxOrdinance 1984, in case of land in pursuance of Finance Act 2010.b) Deferred taxDeferred tax is recognized on difference between the carrying amounts of assets andliabilities in the financial statements and the corresponding tax base used in thecomputation of taxable profit, and are accounted for using balance sheet liabilitymethod. Deferred tax liabilities are generally recognized for all taxable temporarydifferences and deferred tax assets are recognized to the extent that it is probable thatthe profits will be available against which deductible temporary difference, unused taxloses or unused tax credits can be utilized. Such assets and liabilities are not recognizedif the temporary difference arises from goodwill or from the initial recognition (otherthan in a business combination) of other assets and liabilities in a transaction thataffects neither the taxable profit nor accounting profit. Considering the practicesgenerally followed in Bangladesh the Company have been reserved deferred tax assetsor deferred tax liabilities in accordance with BAS 12 “Income Tax”.2.16 Borrowing costsIn compliance with the requirements of BAS 23 “Borrowing Costs” borrowing costsdirectly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily take a substantial period of time to get ready for theirintended use or sale, are added to the cost of those assets, until such time as theassets are substantially ready for their intended use or sale.Borrowing costs are recognized as expenses in the period in which they incurred andcapitalized the same that incurred before commencement of commercial operation.2.17 Revenue recognitionIn compliance with the requirements of BAS 18 “Revenue”, revenue is recognized to theextent that it is probable that the economic benefits will flow to the entity and therevenue can be reliably measured. Revenue is measured at the fair value of theconsideration received of receivable excluding VAT, discounts, commission, rebates andother sales taxes where applicable.Company traditionally makes allotment the plots of land and apartments ahead ofcommencement of land reclamations & development and construction of apartments.Company also receives money against such allotments on installments basis duringspan of two to six years. The amount is booked under advance against sales at the timeof receipt and treaded as sale only when the allotted plots of land are registered andhanded over. In case of apartments, revenue is recognised by applying the percentagePage- 35
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NAVANA REAL ESTATE LIMITED - Dhaka Stock Exchange

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