Amal Ltd 2016-17

65 Notes to the Financial Statements k) Revenue recognition: i) Timing of recognition: Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the goods, the amount of revenue can be measured reliably and it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company’s activities. This generally happens upon dispatch of the goods to customers, except for export sales are recognised when significant risk and rewards are transferred to the buyer as per terms of contract. Revenue from services is recognised in the accounting period in which the services are rendered. Eligible export incentives are recognised in the year in which the conditions precedent are met and there is no significant uncertainty about the collectability. ii) Measurement of Revenue: Revenue is measured at the fair value of the consideration received or receivable, after the deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, etc. Revenue includes excise duty as it is paid on production and is a liability of the manufacturer, irrespective of whether the goods are sold or not. Discounts given include rebates, price reductions and other incentives given to customers. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Accumulated experience is used to estimate and provide for the discounts and returns. The volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as the sales are made with a credit term which is consistent with market practice. l) Leases: Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. As a lessee: Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases. As a lessor: Lease income from operating leases where the Company is a lessor is recognised as income on a straight- line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature. Under combined lease agreements, land & building are assessed individually. Lease rental attributable to the operating lease are charged to profit and loss account as lease income whereas lease income attributable to finance lease is recognised as finance lease receivable and recognised on the basis of effective interest rate. Note 1 Significant Accounting Policies (continued)