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Tractors NepalSchedules forming part of theProfit and Loss Account for the year ended 31st March, 2009SCHEDULE ‘P’SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS1. Accounting PoliciesA. Accounting Convention:The financial statements are prepared under the historical cost convention in accordance with the relevant Indian/InternationalAccounting Standards as applicable.B. Fixed Assets:Fixed assets are stated at cost and are inclusive of all expenses to the date of commissioning / putting the assets to use. Borrowingcost till the date it comes into use is capitalized as part of expenses.C. Depreciation:Depreciation is provided for as prescribed in Schedule XIV of the Indian Companies Act 1956 as amended on straight – line methodat the rates mentioned below. Depreciation on addition is provided from the succeeding month of the purchases of fixed assets.Plant & Machineries 4.75%Computer & Accessories 16.21%Furniture 6.33%Building on leased land 20%Vehicle 20%D. Sales and other incomeRevenue from sales and services is recognized on accrual basis on issuing the tax invoice and stated net of VAT. Commission incomeis recognized on the settlement basis.C. Expenses during Trial Run:Expenses (including depreciation of assets used during the period) incurred during the trial run period are written off over the periodof five years from the year of operation.D. Deferred Revenue Expenses:Expense for company formation and other deferred revenue expenses are written off over the period of five years from the year ofoperation/expensed.E. Inventories:(i) Stock of spares and consumable store is valued at cost on weighted average cost basis and stated net of write-off.(ii) Work in Progress is valued on the percentage of completion basis.F. Tax ProvisionIncome tax provision is made as per Nepal Income Tax Act 2002 as amended @ 26.5% for initial 3.5 months and 25% for rest 8.5month on the book Profit.G. Foreign Currency TransactionsTransactions in foreign currency are reflected at the rates applicable at the year end date and any difference at the time of realizationis shown as Exchange Gain/Loss.NOTES TO THE ACCOUNTSA. Contingent liabilitiesOne of our past customer, Hetauda Cements Factory Limited had filed a case against our company relating to wrong parts supply madeby TIL for a value of Nrs, 920,415.71, for which the appellate court has decided in favor of the customer. The Company has filed the caseat Supreme Court against the above decision for which no provision in the accounts has been made as the case is still pending.B. Commission incomeCommission income amounting to Nrs. 4,262,167.00 as accrued based on the difference between customer invoice and dealer invoice hasbeen booked after deducting estimated 20% relevant expenses which is subject to confirmation and settlement with CAT Singapore.