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Accounting Policies of IQ Infotech Ltd. Company

Mar 31, 2010

1. BASIS OF PREPARATION:

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and materially comply with the mandatory accounting standards notified by the Companies Accounting Standard Rules, 2006 and the Provisions of the Companies Act, 1956. All Income and expenditure, having a material bearing on the financial statements are recognized on the accrual basis.

2. REVENUE RECOGNITION:

A) Revenue from Hardware sales is recognized upon delivery of goods. Sales value is Exclusive of Excise duty and Value Added Tax.

B) Revenue from Software development services comprises income from time-and- Material and fixed price contract. Revenue with respect to time-and-material contracts is recognized as and when related services arc performed. Sales value is exclusive of value Added tax or Service Tax as the case may be.

C) Income for the services rendered is recognized as and when the services are completed and bills raised.

2.1 EXPENDITURE:

a) Expenses are accounted on accrual basis and provision for known liability or losses incurred during the year, except in case of Bonus, Leave travel concession and Encashment of leave and Gratuity , which are accounted on cash basis.

b) Excise Duty is accounted at the stage of removal of goods from manufacturing units.

c) Customs Duty is accounted in the year the goods are cleared from customs bonded warehouse.

3. FIXED ASSETS:

1) Fixed assets are stated at cost of acquisition and any cost of bringing the assets to its working condition for the intended use.

2) Software development and capital work in process - Software development and capital work in progress is capitalized as and when the software and products are intended for a particular job is fully finished and brought to commercial use.

3) R&D Capital expenditure is capitalized and amortized after the completion of project and brought for commercial extraction.

4. DEPRECIATION:

a) Depreciation on Fixed Assets is provided using straight-line method as per Schedule XIV to the Companies Act, 1956.

b) Depreciation on assets are provided at normal S.L.M rates on assets, acquired and held before 30th Sep, and 50% of normal S.L.M rates on assets acquired held after 30th Sept.

5. FOREIGN CURRENCY TRANSACTIONS:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Current assets and liabilities denominated in foreign currency are translated at the rate of exchange as at the Balance-Sheet date. All resulting gains or losses are recognized in the Profit and loss Account.

6. INVESTMENTS:

Long term Investments are stated at cost and short term investments are valued at lower of cost and net realizable value. Diminution in value is provided for where the management is of the opinion that the diminution is of permanent nature.

7. INVENTORIES:

7.1: Closing Stock of Raw Material is valued at cost inclusive of excise duty.

7.2: Finished goods are valued at lower of cost or net realizable value.

7.3: Semi finished goods are valued at Raw Material cost plus proportionate share of production overheads. The Company follows last in first out method for valuation of inventory.

8. RETIREMENT BENEFITS

8.1 Provident Fund:

In accordance with Indian Law, employees receive benefits from a provident fund, which is a defined contribution plan. Both the employer and employee make monthly contributions to the plan equal to 12% of the covered employees basis salary. The company has no further obligations under the plan beyond its monthly contributions.

8.2 Gratuity & Leave Encashment:

The Company has not made any provision for Gratuity & Leave Encashment, during the year and also during the previous year. The Gratuity and Leave Encashment is accounted on cash basis only. The amount of Gratuity & Leave Encashment Liability is yet to be ascertained by the Company.

9. RESEARCH AND DEVELOPMENT:

9.1: In-house Research and development are generally treated as revenue Expenditure. In the case of protos development, this has commercial realizable value, are taken as addition to fixed Assets. The cost of development of such proto types is depreciated as regular assets. The Research & Development which is not complete is taken as capital work in progress.

9.2: Software development purchased directly is capitalized on the basis of the Purchase cost.

9.3: Advances made for software development, which are un finished, are treated as Capital work-in progress.

10. Preliminary expenses incurred up to 31.03.2000 amounting Rs. 5,55,581/- are being amortized over a period of 10 years beginning from 2000-2001.

11. 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 recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

B. NOTES TO ACCOUNTS:

4. EARNINGS IN FOREIGN CURRENCY: Nil Nil

Exports sales (In FOB)

6. QUANTITATIVE PARTICULARS

The quantitative particulars in respect of production, sales, and stock of hardware items are iven below. In case of software development, the production and sale of such software cannot be expressed in any generic unit. Hence it is not possible to give the quantitative details of sales and information as required under paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

7. a. SECURED LOANS:

a. During the year Company has repaid Term Loan of Rs.4.52 (2009: Term Loan taken Rs 88.06) with interest, taken from Canara Bank is secured by charge on companys factor) land and building by way of mortgage and hypothecation of stocks and receivables and house property belonging to Managing Director and personal guarantee of the directors.

b. Working Capital Loan i.e. OCC account and Supply Bills account is secured by charge on companys factory land and building by way of mortgage and hypothecation of stocks and receivables and house property belonging to Managing Director and personal guarantee of the directors.


Mar 31, 2009

1. BASIS OF PREPARATION:

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and materially comply with the mandatory accounting standards notified by the Companies Accounting Standard Rules, 2006 and the Provisions of the Companies Act, 1956. All Income and expenditure, having a material bearing on the financial statements are recognized on the accrual basis.

2. REVENUE RECOGNITION:

A) Revenue from Hardware sales is recognized upon delivery of goods. Sales valueis Inclusive of Excise duty and Value Added Tax.

B) Revenue from Software development services comprises income from time and material and fixed price contract. Revenue with respect to time-and material contracts is recognized as and when related services are performed. Sales value is inclusive of value Added tax.

C) Income for the services rendered is recognized as and when the services are completed and bills raised.

2.1 EXPENDITURE:

a) Expenses are accounted on accrual basis and provision for known liability or losses incurred during the year, except in case of Bonus, Leave travel concession and Encashment of leave and Gratuity, which are accounted on cash basis.

b) Excise Duty is accounted at the stage of removal of goods from manufacturing units.

c) Customs Duty is accounted in the year the goods are cleared from customs bonded warehouse.

3. FIXED ASSETS:

1) Fixed assets are stated at cost of acquisition and any cost of bringing the assets to its working condition for the intended use.

2) Software development and capital work in process Software development and capital work in progress is capitalized as and when the software and products are intended for a particular job is fully finished and brought to commercial use.

3) R&D Capital expenditure is capitalized and amortized after the completion of project and brought for commercial extraction.

4. DEPRECIATION:

a) Depreciation on Fixed Assets is provided using straight-line method as per Schedule XIV to the Companies Act, 1956.

b) Depreciation on assets are provided at normal S.L.M rates on assets, acquired and held before 30th Sep, and 50% of normal S.L.M rates on assets acquired held after 30th Sept.

5. FOREIGN CURRENCYTRANSACTIONS:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Current assets and liabilities denominated in foreign currency are translated at the rate of exchange as at the Balance-Sheet date. All resulting gains or losses are recognized in the Profit and loss Account.

6. INVESTMENTS:

Long term Investments are stated at cost and short term investments are valued at lower of cost and net realizable value. Diminution in value is provided for where the management is of the opinion that the diminution is of permanent nature.

7. INVENTORIES:

7.1: Closing Stock of Raw Material is valued at cost inclusive of Excise Duty.

7.2: Finished goods are valued at lower of cost or net realizable value.

7.3: Semi finished goods are valued at Raw Material cost plus proportionate share of production overheads. The Company follows last in first out method for valuation of inventory.

8. RETIREMENT BENEFITS

8.1 Provident Fund:

In accordance with Indian Law, employees receive benefits from a provident fund, which is a defined contribution plan. Both the employer and employee make monthly contributions to .the plan equal to 12% of the covered employees basis salary. The company has no further obligations under the plan beyond its monthly contributions.

8.2 Gratuity:

The Company has not made any provision for Gratuity payable, during the year. Theamount ofGratuityLiabilityisyettobeascertained.

9. RESEARCH AND DEVELOPMENT:

9.1: In-house Research and development are generally treated as revenue Expenditure. In the case of protos development, this has commercial realizable value, are taken as addition to fixed Assets. The cost of development of such proto types is depreciated as regular assets. The Research & Development which is not complete is taken as capital work in progress.

9.2: Software development purchased directly is capitalized on the basis of the Purchase cost.

9.3: Advances made for software development, which are un finished, are treated as Capital work-in progress.

10. Preliminary expenses incurred up to 31.03.2000 amounting Rs. 5,55,581/- are being amortized over a period of 10 years beginning from 2000-2001.



 
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