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Accounting Policies of Megri Soft Ltd. Company

Mar 31, 2015

2.1 Basis of Preparation of Financial Statements

These financial statements have been prepared to comply with Generally Accepted Accounting Principles in India (Indian GAAP) including the Accounting Standards notified under the relevant provisions of the Companies Act 2013.

These Financial Statements are prepared on accrual basis under historical cost convention. These Financial Statements are presented in Indian Rupees rounded off to the nearest Rupees.

2.2 Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires judgements, estimates and assumptions to be made that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities on the date of financial statements and reported amount of revenue and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known.

2.3 Fixed Assets

a. Tangible Assets

Tangible Assets are stated at cost of acquisition along with related taxes, duties and incidental expenses related to these assets, net of accumulated depreciation and accumulated impairment, if any.

b. Intangible Assets

Intangible Assets are stated at their cost of acquisition, net of accumulated amortisation and accumulated impairment, if any. Projects whose technical & commercial feasibility is demonstrated, future economic benefits are probable, the company has an intention and ability to complete and use or sell the asset, and cost can be measured reliably, are shown as Intangible Assets under Development.

c. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

d. Gain/losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss.

2.4 Depreciation & Amortization

Tangible Assets - Depreciation on tangible assets is provided on the straight-line method over the useful life of the assets as prescribed in the Schedule II to the Companies Act 2013 except in respect of the following assets:

Client Computer - 5 years*

Intangible assets are amortised over their respective individual estimated useful lives on straight line basis, commencing from the date asset is available for use to the company.

Computer Software - 6 Years*

Web Properties - 10 Years*

(*Note: for this based on internal assessment and independent technical evaluation carried out by external valuer, the management believes that the useful life as given above best represents the period over which management expects to use the assets.)

2.5 Impairment

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to Profit & Loss Statement in the year in which asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimated recoverable amount.

2.6 Foreign Currency Transactions

a. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate as at the date of transaction.

b. Any income or expenses on account of exchange differences either on settlement or translation/restatement is recognised in the Profit and Loss statement .

2.7 Income Taxes

Tax expense comprises of current tax & deferred tax. Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax, based on the tax liability computed, after considering tax allowances and exemptions. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably.

The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified,and thereafter a deferred tax asset or liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount of timing difference. Deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situation of unabsorbed depreciation and carried forward business losses, are recognized only if there is reasonable certainty that they will be realized. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each reporting date. Deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority.

2.8 Investments

Current Investments, if any, are stated at cost or fair market value, whichever is lower. Non current investments are stated at cost. Provision for diminution in the value of N on current investments is made, only if a decline is other than temporary.

2.9 Provisions & Contingent Liabilities

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability.

A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.10 Revenue Recognition

The company's revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue and costs, if applicable, can be measured reliably. Revenue is recognized in the Statement of Profit & Loss as follows:

* Revenue from services rendered is recognized as the service is performed.

* Revenue from the sale of Software products is recognized when the sale is completed with the passing of title.

* Incomes from domain registration, web hosting, set-up and configuration charges are recognized on activation of customer account.

* Revenue from software and web development contracts are recognized on the completion of development work.

* Interest income is recognised on accrual basis.

2.11 Earning Per Share

Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period.


Mar 31, 2014

The significant accounting policies adopted in the preparation of this financial report are set out below and are consistent with those of the previous year unless otherwise stated.

1.1 Basis of Presentation :

The financial statements are prepared under the historical cost convention, in accordance with Indian Generally Accepted Accounting Principles ("GAAP") on the accrual basis. GAAP comprises mandatory accounting standards issued by the Institute or Chartered Accountants of India ("lCAl") and the provisions of the Companies Act, 1956, These accounting policies have been consistently applied for except primary market brokerage which is accounted on cash basis All assets and liabilities have been classified as current or non-current as per the company''s operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956.

1.2 Fixed Assets:

Fixed Assets are stated at cost of acquisition including any attributable cost to bring the assets to their working condition, less depredation which is provided using the straight-line method based on useful lives as estimated by the management. Intangible assets are stated, at their cost of acquisition. Profit/Loss on disposal of fixed assets is recognised In the Statement of Profit and Loss.

1.3 Depreciation:

Depreciation on assets for own use is provided on straight-line method on pro-rata basis at the rates prescribed in Schedule XIV to the Act. No depreciation charged on Assets not put in to use during the year. The assets which have been used by the company for tunning its revenue operations have been charged to the revenue account and the depreciation on rest of the assets used for development of portals is being capitalized.

1.4 Valuation of stock-in-trade :

Stock-in-Trade is valued at cost or market value whichever is lower

1.5 Revenue Recognition :

The company''s revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue and costs, if applicable, can be measured reliably. Revenue is recognized in the Income Statement as follows:

(i) Revenue from services rendered is recognized as the service is performed.

(ii) Revenue from the sale of Software products is recognized when the sale is completed with the passing of title.

(iii) Incomes from domain registration, web hosting, set-up and configuration charges are recognized on activation of customer account.

(iv) Revenue from software and web development contracts are period on the completion of development work.

1.6 Investments ;

Long term investments are stated at cost. Provision for diminution in long term investments is made, if it is permanent. Short term investments if any are stated at cost or fair market value whichever is lower. Sale and Purchase of investment is accounted on gross basis and shown in profit and loss account.

1.7 Capital work in progress;

The company is in process developing certain web portals/vortals and the expenditure on the same is being treated as Capital Work in progress like expenditure in the nature of salaries, travel expenses, internet expenses, server maintenance expenses etc. The expenditure on completion of the project (web portals), will be treated as intangible assets as the company expects to derive benefits of the same in the coming future years.

1.8 Foreign Exchange :

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time in a month. Any income or expense on account of exchange rates prevailing at the time in a month. Any income or expense on account of exchange differences either on settlement or on translation of transaction other than those relating to fixed assets is recignized in the Profit and Loss in the foreign fluctuation account. Closing foreign balances are recognised at the prevailing market rate at the end of the day 31st March and difference if any is charged to foreign fluctuations.

1.9 Taxation:

Tax expense comprises of current tax and deferred tax, Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevalling in the respective jurisdictions. Current tax assets and crrent tax liabilities are offset when them is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis, Deferred tax reflects the effect of temporary timing differences between the assets and liablilities recognized for financial reporting purposes and the amounts that are recognized for current tax purposes.

Deferred tax assets are recognized and carried forward only to the extent there is a reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.10 Provisions and Contingencies :

The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.

1.11 Earnings per Share :

The earnings considered in ascertaining the Company''s earnings per share comprise the net profit or loss for the year attributable to the equity shareholders. Earnings per share is computed using the weighted average number of shares outstanding during the year.

1.12 Use of Estimates :

The preparation of financial statements in conformity with accounting principles generally accepted in India requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates.

1.13 Terms/Rights attached to equly share

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pay dividend in Indian rupees. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company in proportion to their shareholding.

 
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