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Accounting Policies of IO System Ltd. Company

Mar 31, 2014

1 Corporate Information

IO System limited had entered into a joint venture(JV) agreement with the General Binding Corporation (GBC), USA on 19th june, 1988 for manufacturing and selling office Automation products. The JV was terminated with mutual consent between the parties on 31st March, 2002 and now more than 96% capital of the company is held by Smart Entertainment Ltd. (formerly known as Spice Enfotainment Ltd. & prior to that Spice Corp. Ltd.) except little shareholding with the public. The manufacturing activities had been discontinued since Feb., 2006 due to continued losses in the company. The company has also not done very well in its trading business as result of which, there have been no business activities in the company during the past five years.

2 Basis of Accounting

The financial statements are prepared under the historical cost convention on the concept of a going concern, in accordance with the Generally Accepted Accounting Principles and mandatory Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006 and as per the provisions and presentational requirements of the Companies Act, 1956 read with General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

3 Changes in Accounting policies

The accounting policies adopted are consistent with those of previous financial year. The management assures that there has been no change in accounting policies as compared to that of previous year which would have any significant effect on these financials.

4 Recognition of Income

Income is recognised and accounted for on accrual basis unless otherwise stated.

5 Tangible Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Depreciation on tangible fixed assets

Each assets costing Rs. 5,000 or less each is 100% depreciated in the year of purchase. Depreciation is provided using the SLM Method, at the rates prescribed under Schedule XIV of the Companies Act, 1956.

Particulars Rates (SLM)

Computers 16.21%

Plant & machinery 4.75%

6 Taxes on Income

Current tax is determined and provided for on the amount of taxable income at the applicable rates for the relevant financial year. Deferred Tax Assets and Liabilities (DTA/ DTL) are recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods. The DTA is recognised only to the extent that there is reasonable certainty of sufficient future profits against which such DTA can be realised.

7 Contingent Liability

The contingent liabilities, if any, are disclosed in the Notes to Accounts. Provision is made in the accounts, if it becomes probable that there will be outflow of resources for settling the obligation.

8 Events occurring after the balance sheet date

Adjustments to assets and liabilities are made for events occurring after the balance sheet date to provide additional information materially affecting the determination of the amounts of assets or liabilities relating to conditions existing at the balance sheet date.

9 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

10 Use of estimates

The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of the financial statements and the results of operations during the reporting year. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.


Mar 31, 2013

I Corporate Information

IO System limited had entered into a joint venture(JV) agreement with the General Binding Corporation (GBC), USA on 19th june, 1988 for manufacturing and selling office Automation products. The JV was terminated with mutual consent between the parties on 31st March, 2002 and now more than 96% capital of the company is held by Spice Infotainment Ltd. (formerly known as Spice Corp. Ltd.) except little shareholding with the public. The manufacturing activities had been discontinued since Feb., 2006 due to continued losses in the company. The company has also not done very well in its trading business as result of which, there have been no business activities in the company during the past five years.

ii Basis of Accounting

The financial statements are prepared under the historical cost convention on the concept of a going concern, in accordance with the Generally Accepted Accounting Principles and mandatory Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006 and as per the provisions and presentational requirements of the Companies Act, 1956.

iii Changes in Accounting policies

The accounting policies adopted are consistent with those of previous financial year. The management assures that there has been no change in accounting policies as compared to that of previous year which would have any significant effect on these financials.

iv Recognition of Income

Income is recognized and accounted for on accrual basis unless otherwise stated.

v Tangible Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

vi Depreciation on tangible fixed assets

Each assets costing Rs. 5,000 or less each is 100% depreciated in the year of purchase. Depreciation is provided using the SLM Method, at the rates prescribed under Schedule XIV of the Companies Act, 1956.

Particulars Rates (SLM)

Computers 16.21%

Plant & machinery 4.75%

vii Taxes on Income

Current tax is determined and provided for on the amount of taxable income at the applicable rates for the relevant financial year. Deferred Tax Assets and Liabilities (DTA/ DTL) are recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods. The DTA is recognized only to the extent that there is reasonable certainty of sufficient future profits against which such DTA can be realized.

viii Contingent Liability

The contingent liabilities, if any, are disclosed in the Notes to Accounts. Provision is made in the accounts, if it becomes probable that there will be outflow of resources for settling the obligation.

ix Events occurring after the balance sheet date

Adjustments to assets and liabilities are made for events occurring after the balance sheet date to provide additional information materially affecting the determination of the amounts of assets or liabilities relating to conditions existing at the balance sheet date.

x Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year/ period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year/ period.

xi Use of estimates

The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of the financial statements and the results of operations during the reporting year. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.


Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENT

The financial statements are prepared in accordance with the historical cost convention on the accrual system of accounting, on the concept of a going concern and in accordance with generally accepted accounting practices and mandatory Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006 and in accordance with the presentational requirements of the Companies Act, 1956.

However, the concept of a going concern has been severely affected adversely due to i) disposal of substantial part of the fixed assets of the company to outside party/ subsidiary company, ii) continued losses in past several years; and iii) erosion of entire paid up capital by acumulated losses.In view of nil operational activites in the company, the management is in the process of liquidating the current assets such as inventories, loans and advances and settling the current liabilities. The total fixed assets have since been sold and now only one computer is left in the company.

2. 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 and liabilities and disclosures relating to the contingent liabilities as on the date of the financial statements and reported amounts of income and expenses during the year. Example of such estimates include provisions for doubtful debts, employee retirement benefit plans, provision for income taxes and the useful lives of fixed assets.

3. FIXED ASSETS AND DEPRECIATION

Fixed assets are stated at cost less accumulated depreciation. The Company capitalises all costs relating to the acquisition and installation of fixed assets. Depreciation on fixed assets, other than demonstration machines and machines for rental and lease, is provided pro-rata to the period of use on the straight-line method using rates determined based on the managements assessment of useful economic lives of the assets or the annual depreciation rates specified in Schedule XIV to the Companies Act,1956, whichever is higher, as follows:

%

Plant and machinery 4.75

Moulds 11.31

Furniture and fixtures 6.33

Office equipment 4.75

Computers 16.21

Vehicles 9.50

Demonstration machines and machines for rentals and lease are depreciated over an estimated economic useful life of six years. Individual Fixed assets having value of Rs. 5000/- or less are fully depreciated in year of purchase.

4. INVENTORIES

Inventories of Trading Goods, Finished Goods, Service Components & Spares are taken by the management and valued at the lower of cost or net realizable value. The Cost is determined on first in first out basis. Inventories are stated net of write-downs or allowances on account of obsolescence, damaged or non-moving items. Excise and customs duty payable on finished goods is included in the value of the finished goods.

5. FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are recorded by applying exchange rate at the dates of transactions. The foreign currency monetary assets and liabilities and outstanding foreign currency liabilities relating to non- monetary items are re-instated at exchange rates prevailing at the balance sheet date. Exchange gains or losses, arising out of fluctuations in the exchange rates, on settlement during the year/ reinstatement at the year end, are recognized in the Profit & Loss A/c.

6. REVENUE RECOGNITION

Product sales (net of sales tax, trade discounts, returns and allowances) are recognized upon dispatch of goods to customers.

7. INSURANCE CLAIMS

Insurance (Income) claims are accounted for on the basis of insurance surveyers report.

8. 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 is recognized, wherever the carrying amount of an asset exceeds its recoverable amount.

The liability for leave encashment is provided for in accordance with the rules of the Company.

9. RETIREMENT BENEFITS

Retirement benefits to employees comprise of gratuity and provident fund. The Company has established a self- administered provident fund trust to which contributions are made on a monthly basis. The provisions of Payment of Gratuity Act are not applicable as the company does not employ the requisite number of employees required under the said Act.

10. LEAVE ENCASHMENT

The liability for leave encashment is provided for in accordance with the rules of the Company.

11. Taxes on Income

Provision for Taxation comprises of Income Tax liability on the profits for the year chargeable to tax and deferred tax resulting from timing difference between Book & Tax profits. The Deferred Tax Assets/Liabilites are provided for as per the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting Standard (AS) 22 "Accounting for Taxes on Income". Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

12. EARNING PER SHARE

Basic earnings/(loss) is calculated by dividing the net profit/(loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earnings/(loss) per share and diluted earnings/(loss) per share is the same.

 
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