Amal Ltd 2011-12

31 Notes to financial statements for the year ended March 31, 2012 F. Impairment of Assets: The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal | external factors. An impairment loss will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in circumstances. G. Borrowing Costs: Borrowing costs in relation to acquisition and construction of qualifying assets are capitalised as part of cost of such assets up to the date when such assets are ready for intended use. Other borrowing costs are charged as expense in the year in which these are incurred. H. Investments: Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. I. Inventories: i. Raw materials, packing materials and fuel are valued at cost. Cost is arrived at on FIFO basis. ii. Stores and spares other than specific spares for machinery are valued at cost. Cost is arrived at on FIFO basis. iii. Materials-in-process and finished goods are valued at cost or net realisable value whichever is lower. Finished goods stocks are valued at full absorption cost (including excise duty). iv. Materials in transit and in Bonded Warehouse are stated at the cost to the date of Balance Sheet. J. Foreign Currency Transaction: i. Initial Recognition: Transactions denominated in foreign currencies are recorded at the rate prevailing on the date of the transaction. ii. Conversion: A t the year-end, monetary items denominated in foreign currencies remaining unsettled are converted into rupee equivalents at the year-end exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. iii. Exchange Differences: A ll exchange differences arising on settlement and conversion of foreign currency transactions are included in the Statement of Profit and Loss. K. Revenue Recognition: i. Sale of Goods: R evenue is recognised when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. It includes excise duty but excludes value added tax and sales tax. ii. Lease rental income is recognised on accrual basis. iii. Dividend Income is accounted for in the year in which the right to receive the same is established. iv. Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. L. Provisions, Contingent Liabilities and Contingent Assets: A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the Balance Sheet date and adjusted to reflect the current management estimates.