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Accounting Policies of Acclaim Industries Ltd. Company

Mar 31, 2010

14.1.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention on an accrual basis in accordance with the Generally Accepted Accounting Principles in India ("GAAP"). GAAP comprises accounting standards as specified in Rule 3 of the Companies (Accounting Standards) Rules 2006, and the relevant provisions of the Companies Act, 1956 to the extent applicable.

14.1.2 Use of Estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. The difference between the actual results and estimates are recognized in the period in which results are known / materialized.

14.1.3 Revenue Recognition

Revenue is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interest income is recognized on a time proportion basis. Dividend is recognized when right to receive is established.

14.1.4 Fixed Assets and Depreciation

Fixed Assets are stated at cost, after reducing accumulated depreciation and impairment upto the date of Balance Sheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to any borrowing attributable to acquisition or construction of those fixed assets which necessarily take substantial period of time to get ready for its intended use. Intangible assets are recorded at the consideration paid for acquisition of such assets. Depreciation on fixed assets is provided at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, on SLM Method.

14.1.5 Taxes on Income

Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals.

Deferred tax is recognized on timing differences between the accounting income and the estimated taxable income for the year and quantified using the tax rates and laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets/Liabilities, other than brought forward business loss and unabsorbed depreciation are recognized and carried forward to the extent there is reasonable certainty that sufficient future taxable income will be available against which deferred tax assets/Liabilities can be adjusted.

14.1.6 Provisions, Contingent Liabilities and Contingent Assets

The company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.A disclosure for a contingent liability is made when there is a present obligation that cannot be estimated reliably or a possible or present obligation that may, but probably will not, require an outflow of resources.When there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are made for all known losses and liabilities and future unforeseeable factors that may affect the profit of the entity. Accounting for contingencies (gains and losses) arising out of contractual obligation, are accounted on the basis of mutual acceptances. Contingent Assets are neither recognized nor disclosed. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

14.1.7 Events Occurring After the Balance Sheet Date

Where material, events occurring after the date of the Balance Sheet are considered upto the date of approval of accounts by the Board of Directors

14.1.8 Impairment of Assets

Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the assets net selling price and value in use i.e. the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognised for the asset in prior years.

14.1.9 Earnings per share

In determining earnings per share, the company considers the net profit after tax.The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of basic and diluted common equivalent shares outstanding during the period except where the result would be anti dilutive.

14.1.10 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments.The cash flows from operating, financing and investing activities of the company are segregated.

14.I.I I Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary in nature, in the carrying amount of such long term investments.

14.1.1 2 Inventories

Inventories are valued at lower of cost and net realizable value.

14.1.13 Borrowing Cost

i) Borrowing costs on working capital is charged to profit and loss statement in the year of incurrence. ii) Borrowing costs that are attributable to the acquisition of tangible fixed assets are capitalized till the date of substantial completion of the activities necessary to prepare the relevant asset for its intended use.

iii) Borrowing costs that are attributable to the acquisition or development of intangible assets are capitalized till the date they are put to use.

I 4.1.1 4 Employees Benefit

i) Bonus is paid to all employees on yearly basis.The liability on account of bonus is provided on actual basis

ii) Incentives such as mediclaim and insurance are paid for permanent employees by the Company. The liability on account of such incentives is provided on actual basis.

iii) The rules of the company do not provide for encashment of unutilized leave.

14.1.15 Foreign Currency Transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing at the date of transaction. Monetary items denominated in foreign currency at the year end are translated at year end rate.The exchange differences arising on settlement / translation are recognized in the Profit and Loss Account.

 
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