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Accounting Policies of Agnite Education Ltd. Company

Sep 30, 2011

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention from the books of accounts maintained on accrual basis, in conformity with accounting principles generally accepted in India, and comply with the accounting standards issued by the council of the Institute of Chartered Accountants of India and referred to in Section 211 (3C) of the Companies Act, 1956, (the Act).

B. Use of Estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Actual results could differ from these estimates. Any revision in accounting estimates is recognised prospectively in current and future periods.

C. Revenue Recognition

i) Revenue from software development / software products recognized on the basis of delivery of the licenses of the required software products specified in the purchase order. The company also performs time bound fixed price engagements, under which, revenues are recognized using the stages of completion method of accounting.

ii) Income and expenditure is accounted on accrual basis.

iii) Dividends are recorded when the right to receive payment is established.

D. Fixed Assets

i) Fixed assets are stated at cost less depreciation. All costs relating to the acquisition and installation of fixed assets are capitalised including directly attributable financing costs relating to borrowed funds and costs of bringing the asset to working condition for its intended use.

ii) Software product development expenditure including expenditure on upgrades and new version are capitalized on completion of the product. Cost of Software purchased and procured for product development/customisation is added to software purchase expenditure.

iii) Capital Work in Progress comprises of all directly attributable costs of bringing the assets to their working condition for their intended use and all indirect and incidental expenses.

E. Depreciation / Amortisation

Depreciation is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Software product development expenditure is amortised over a period of three years. Lease hold buildings are amortised over the period of lease.

F. Borrowing cost

Borrowing costs are recognised as an expense in the period in which they are incurred except those which are directly attributable to acquisition/construction of fixed asset, till the time such assets are ready for use, in which case the borrowing costs are capitalised as part of the cost of asset.

G. Investments

i) Long term Investments are stated at cost. Provision for diminution in value of long term investments is made only if there is a decline other than temporary in the opinion of the management.

ii) Current Investments are stated at cost or market value whichever is lower.

H. Foreign Currency Transactions

i) India: Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transactions. Resultant exchange difference, arising on payment is recognised as income or expense, in the period in which they arise.

ii) The foreign exchange gain on reinstatement of Debtors, Creditors and Advances during the period has not been recognised in the books of accounts.

iii) Any income and expenses on account of currency exchange difference either on settlement or on translation is recognised in the profit & loss account, except in accordance with schedule VI till March 31st 2011 on the amount of payables and receivables related to purchase and sales.

iv) Overseas Branches: Revenue transactions in foreign currency from overseas branches are recorded at the average exchange rate for the period, whereas the asset and liabilities are stated at closing exchange rates except for Investments for which rate prevailing on the date of investment or acquisition is applied for conversion. Resulting exchange difference, on conversion of assets and liabilities and income and expenses are transferred to Foreign Currency Translation Reserve.

I. Retirement Benefits

i) The Company's Contribution to Provident Fund are charged to Profit and Loss Account.

ii) The liability for gratuity determined as on the Balance Sheet date, as per the provisions of Payment of Gratuity Act, is provided for and this liability is not funded.

iii) In respect of Overseas Branches, the liability for gratuity and leave encashment is provided as per the prevailing laws of the respective countries.

J. Taxes on Income

Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled. Deferred tax expense or benefit is recognised 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 assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets consisting of unabsorbed depreciation and carry forward of losses are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise these assets.

K. Earnings per share

The basic earnings per share is computed by dividing the net profit after tax for the period by the weighted average number of equity shares outstanding during the period. Diluted earnings per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

L. Impairment

Except otherwise than for Financial Assets, Inventories and Deferred Tax Asset, the Carrying Amounts of all the Assets are reviewed at each balance sheet date to determine any indications of impairment. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value . An impairment loss is charged to the Profit and Loss account in the period in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

M. Provision, Contingent Liabilities and Contingent Assets

Contingent liabilities, if any, are disclosed by way of Notes on accounts. Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provision is made in the Accounts in respect of those contingencies which are likely to materialise into liabilities after the period end, till the approval of accounts by the Board of Directors and which have material effect on the position stated in Balance sheet.


Mar 31, 2009

A. Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention from the books of accounts maintained on accrual basis, in conformity with accounting principles generally accepted in India, and comply with the accounting standards issued by the council of the Institute of Chartered Accountants of India and referred to in Section 211 (3C) of the Companies Act, 1956, (the Act).

B. Use of Estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Actual results could differ from these estimates. Any revision in accounting estimates is recognised prospectively in current and future periods.

C.Revenue Recognition

i) Revenue from software development/ software products recognized on the basis of delivery of the licenses of the required software products specified in the purchase order. The company also performs time bound fixed price engagements, under which, revenues are recognized using the stages of completion method of accounting.

ii) Income and expenditure is accounted on accrual basis.

iii) Dividends are recorded when the right to receive payment is established.

D. Fixed Assets

i) Fixed assets are stated at cost less depreciation. All costs relating to the acquisition and installation of fixed assets are capitalised including directly attributable financing costs relating to borrowed funds and costs of bringing the asset to working condition for its intended use.

ii) Software product development expenditure including expenditure on upgrades and new version are capitalized on completion ofthe product. Cost ofSoftware purchased and procured for product development/customisation is added to software purchase expenditure.

iii) Capital Work in Progress comprises of all directly attributable costs of bringing the assets to their working condition for their intended use and all indirect and incidental expenses.

E. Depreciation / Amortisation

Depreciation is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Software product development expenditure is amortised over a period of three years. Lease hold buildings are amortised over the period of lease.

F. Borrowing cost

Borrowing costs are recognised as an expense in the year in which they are incurred except those which are directly attributable to acquisition/construction of fixed asset, till the time such assets are ready for use, in which case the borrowing costs are capitalised as part of the cost of asset.

G. Investments

i) Long term Investments are stated at cost. Provision for diminution in value of long term investments is made only if there is a decline otherthan temporary in the opinion ofthe management

ii) Current Investments are stated at cost or market value whichever is lower.

H. Foreign Currency Transactions

i) India: Transactions in foreign currency are recorded at the exchange rate prevailing at the date of the transactions. Resultant exchange difference, arising on payment is recognised as income or expense, in the year in which they arise.

ii) The foreign exchange gain on reinstatement of Debtors, Creditors and Advances during the year has not been recognised in the books of accounts.

iii) The Company uses foreign exchange forward contracts to hedge for some of its exposure to movements in foreign exchange rates. The premium or discount arising at the inception of such a forward exchange contract is charged to the profit & Loss Account. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or expense for the period.

iv) Any income and expenses on account of currency exchange difference either on settlement or on translation is recognised in the profit & loss account, except in accordance with schedule VI till March 31st 2009 on amount of payables and receivables related to purchase and sales.

v) Overseas Branches: Revenue transactions in foreign currency from overseas branches are recorded at the average exchange rate for the year, whereas the asset and liabilities are stated at closing exchange rates except for Investments for which rate prevailing on the date of investment or acquisition is applied for conversion. Resulting exchange difference, on conversion of assets and liabilities and income and expenses are transferred to Foreign Currency Translation Reserve.

I. Forward contracts and options in foreign currencies

i) The company uses foreign exchange forward contracts and options to hedge its exposure to movements in foreign exchange rates relating to certain firm commitments and forecasted transactions. The use of these foreign exchange forward contracts and options reduces the risk or cost to the Company and the Company does not use theforeign exchange forward contracts or options fortrading orspeculation purposes.

ii) The Company has planned to adopt Accounting Standard (AS) 30 on Financial Instruments: Recognition and Measurement from 1st April 2011 from the date the same becomes mandatory which requires the changes in the fair values of forward contracts and options designated as effective cash flow hedges to be recognized directly in shareholders funds and reclassified into the profit and loss account upon the occurrence of the hedged transaction and in the absence of a designation as effective hedge, gain/loss to be recognized in the profit and loss account.

iii) In the intervening period till 1st April 2011 the losses if any will be provided in respect of all outstanding derivative contracts at the balance sheet date marking them to market as a prudent policy in pursuance of the announcement dated 29th March, 2008 by the Institute of Chartered Accountants of India for contracts other than those to which Accounting Standard 11- The effects of Changes in Foreign Exchange rates apply.

J. Retirement Benefits

i) The Companys Contribution to Provident Fund are charged to Profit and Loss Account.

ii) The liability for gratuity determined as on the Balance Sheet date, as per the provisions of Payment of Gratuity Act, is provided for and this liability is not funded.

iii) In respect of Overseas Branches, the liability for gratuity and leave encashment is provided as per the prevailing laws of the respective countries.

K. Taxes on Income

Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled.

Deferred tax expense or benefit is recognised 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 assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets consisting of unabsorbed depreciation and carry forward of losses are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise these assets.

Fringe Benefit Tax is provided in accordance with provisions of Section 115WA of the Income Tax Act,1961 as expenses.

L. Earnings per share

The basic earnings per share is computed by dividing the net profit after tax for the period by the weighted average number of equity shares outstanding during the period. Diluted earnings per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

M. Impairment

Except otherwise than for Financial Assets, Inventories and Deferred Tax Asset, the Carrying Amounts of all the Assets are reviewed at each balance sheet date to determine any indications of impairment. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value . An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

N. Provision, Contingent Liabilities and Contingent Assets

Contingent liabilities, if any, are disclosed by way of Notes on accounts. Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provision is made in the Accounts in respect of those contingencies which are likely to materialise into liabilities after the year end, till the approval of accounts by the Board of Directors and which have material effect on the position stated in Balance sheet.

 
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