KC Textiles Ltd. कंपली की लेखा नीति

Mar 31, 2010

A) BASIS OF ACCOUNTING

The financial statements are prepared under the historical cost convention and comply in all material aspects with applicable accounting principles in India, Accounting Standards notified under sub-section 3 ( C) of Section 211 of The Companies Act, 1956 and the other relevant provisions of the Companies Act, 1956.

b) REVENUE RECOGNITION

i) Revenue is recognized on completion of sale of goods. Sales are stated net of Excise Duty, Sales Tax & Rebates.

ii) Dividend income on investments is accounted for when the right to receive the same is established.

iii) Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

c) FIXED ASSETS

All Fixed Assets are stated at cost of acquisition (less accumulated depreciation). Cost of acquisition includes taxes, duties (net of tax credits as applicable) and other identifiable direct expenses. Interest on borrowed funds, if any, attributable to the qualifying assets up to the period such assets are put to use is included in the cost. Intangible assets are stated at cost less accumulated amount of amortization.

d) DEPRECIATION/AMORTIZATION

Depreciation on fixed assets is provided on Straight Line method at rates and in the manner provided in Schedule XlVto the Companies Act, 1956.

Assets costing up to Rs.5,000/- each are depreciated fully in the year of purchase. The depreciable amount of intangible asset is allocated over its useful life.

e) INVENTORIES

i) Inventories are valued at lower of cost or net realizable value except saleable waste which is valued at estimated realizable value.

ii) Cost of raw materials, stock in trade and stores & spares parts etc. is determined on first in first out basis.

iii) The Cost of finished goods and work in process includes cost of raw materials and estimated factory overheads and excise duty, wherever applicable.

f) INVESTMENTS

Current Investments are carried at lower of cost or market value.

g) EMPLOYEE BENEFITS:

Contribution to Defined Contribution schemes such as Provident Fund etc. is charged to the Profit & loss account as and when incurred. Provision for leave encashment and for gratuity liability to employees is made at the end of the year on the basis of actual valuation. Liability on account of short term employee benefits comprising largely of compensated absences, bonus and other incentives is recognized on an undiscounted accrual basis.

h) FOREIGN EXCHANGE TRANSACTIONS:

i) Transactions in foreign currencies are recorded at the exchange rates prevailing at the date of the transactions. Transactions outstanding at year end are translated at exchange rates prevailing at the year end and the profit/loss so determined is recognized in the Profit and Loss Account.

ii) Where forward contracts are entered into the difference between the exchange rate on the date of the contract and the year end rates/ settlement date is recognized in the profit and loss account. Any premium/ discount on forward contracts is amortized over the life of the contract. Profit/Loss on cancellation or renewal of forward contracts is recognized as income/expense for the period.

I) PRIOR PERIOD ITEMS

The expenditure and income pertaining to prior years are shown separately under the head Prior Period Adjustments.

j) TAXATION

Provision for current tax and fringe benefit tax is made based on the liability computed in accordance with relevant tax rates and tax laws.

Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognized only to the extent there is virtual certainty and convincing evidence that there will be sufficient future taxable income available to realize such assets.

k) IMPAIRMENT OF ASSETS

The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment of assets. If any such indication exists, impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of accounts. In case there is any indication that an impairment loss recognized for an asset in prior accounting periods no longer exists or may have decreased, the recoverable value is reassessed and the reversal of impairment loss is recognized as income in the profit & loss account.

l) PROVISIONS/CONTINGENT LIABILITIES

A provision is recognized when the company has a present obligation as a result of a past event and it is probable that an outflow of resources would be required to settle the obligation, and in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and are adjusted to effect the current best estimation. A contingent Liability is disclosed after a careful evaluation of the facts and legal aspects of the matter involved where the possibility of an outflow of resources embodying the economic benefits is remote.

m) OTHER ACCOUNTING POLICIES

These are consistent with generally accepted accounting practices.