UBHL annual report - United Spirits Limited

Consolidated Financial StatementsNotes to the financial statements for the year ended March 31, 2012 (Contd.)1.5 Fixed Assetsa) Tangible assets are stated at their original cost of acquisition and subsequent improvements thereto includingtaxes, duties, freight and other incidental expenses related to acquisition and installation of the assets concerned,except amounts adjusted on revaluation and amalgamation. Interest on borrowings attributable to qualifyingassets are capitalised and included in the cost of fixed assets as appropriate.b) The costs of Tangible Assets acquired in amalgamations are determined at their fair values, on the date ofacquisition or nearer thereto, or as approved under the schemes of amalgamation.c) Assets held for disposal are stated at their net book value or estimated net realisable values, whichever is lower.d) Goodwill on consolidation represents the difference between the Company’s share in the net worth of a subsidiaryand cost of acquisition at each point of time of making the investment in the subsidiary. Negative goodwill isshown separately as Capital Reserve on consolidation.e) Intangible assets are stated at the consideration paid for acquisition less accumulated amortisation and impairmentlosses if any.1.6 LeasesAssets acquired under Leases, where the Company has substantially all the risks and rewards of ownership, are classifiedas finance leases. Such leases are capitalised at the inception of the lease at lower of the fair value or the presentvalue of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocatedbetween the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstandingliability for each period.Assets acquired on leases, where a significant portion of the risk and rewards of ownership are retained by the lessor,are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis.Income from operating leases is credited to Statement of Profit and Loss on a straight line basis over the lease term.1.7 Depreciation and Amortisationa) Depreciation is provided on the Straight Line Method, including on assets revalued, at rates prescribed in ScheduleXIV to the Companies Act, 1956 of India except for the following, which are based on management’s estimateof useful life of the assets concerned:i) Computers, Vehicles and Aircrafts over a period of three, five and eleven years respectively;ii) In respect of certain items of Plant and Machinery for which separate rates are prescribed in Schedule XIVbased on the number of shifts, depreciation is provided for the full year on triple shift basis;iii) In respect of fixed assets of Whyte and Mackay Group, depreciation is provided based on management estimateof useful lives of the assets concerned as below:Buildings50 yearsPlant and Machinery10 to 20 yearsVehicles4 yearsComputers3 yearsAlso refer Note 29.b) Fixed assets acquired on amalgamation, over the remaining useful life computed based on rates prescribed inSchedule XIV, as below:Buildings - Factory1 to 30 years- Non Factory 1 to 54 yearsPlant and Machinery1 to 20 yearsVehicles1 to 4 yearsComputers1 to 2 years75