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Accounting Policies of MVL Ltd. Company

Mar 31, 2015

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Mar 31, 2014

(a) Basis of Accounting

The financial statements are prepared under the historical cost convention, using accrual basis of accounting, unless otherwise stated under Note No.1 (c) iv, in accordance with the generally accepted accounting principles in India, the accounting standards notified under the companies (Accounting Standard) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (The Act)

(b) Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting year. Actual results could differ from those estimates and any revision is recognized in the current and future years.

(c) Revenue Recognition

Real Estate Projects

i. Revenue from Real Estate Projects is recognized in accordance with the provisions of Accounting Standard (AS) 9 on Revenue Recognition, read with Guidance Note on "Recognition of Revenue by Real Estate Developers"

Revenue is recognized based on "Percentage of Completion" method and on the percentage of actual project costs incurred thereon to total estimated project cost, subject to such actual cost incurred being 25 per cent or more of the total estimated project cost

ii. The estimates of the projected revenues, saleable area and projected costs are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined.

iii. Where aggregate of the payments received provide insufficient evidence of Buyers commitment to make the complete payment, revenue is recognized only to the extent of realization.

iv. While all incomes and expenses are accounted for on accrual basis, Interest on delayed payments by customers against dues is taken on realization, owing to practical difficulties and uncertainties involved.

v. With effect from April 1, 2012 in accordance with the Revised Guidance Note issued by Institute of Chartered Accountants of India ("ICAI") on "Accounting for Real Estate Transactions (Revised 2012)", the Company has revised its Accounting Policy of revenue recognition for all projects commencing on or after April 1, 2012 or project where the revenue is recognized for the first time on or after the said date. As per this Guidance Note, the revenue is recognized on percentage of completion method provided all of the following conditions are met at the reporting date.

- atleast 25% of estimated construction and development costs (excluding land cost) has been incurred;

- atleast 25% of the saleable project area is secured by the Agreements to sell/application forms (containing salient terms of the agreement to sell); and

- atleast 10% of the total revenue as per agreement to sell are realized in respect of these agreements.

(d) Cost of construction / Development

Accumulated project cost i.e. cost of construction / development comprises of: -

a) Expenses directly related to the project.

b) Finance Cost including interest and charges incurred up to the completion of the project are considered as attributable cost to the project and included under accumulated Project cost.

c) Project costs in relation to a project ordinarily comprise

- Cost of land and cost of development rights -All costs related to the acquisition of land, development rights in the land or property including cost of land, cost of development rights, rehabilitation costs, registration charges, stamp duty, brokerage costs and incidental expenses.

- Borrowing Costs - In accordance with Accounting Standard (AS) 16, Borrowing Costs which are incurred directly in relation to a project or which are apportioned to a project.

- Construction and development costs - These would include costs that relate directly to the specific project and costs that may be attributable to project activity in general and can be allocated to the project.

(e) Inventory

The Inventory comprises of lands, projects completed or under construction, building material in hand and rights in identified lands including: -

a) Work-in-progress comprises of land, materials, services and other overheads related to project under construction and is valued at cost.

b) Stock of building material is valued at cost.

c) Completed units remaining unsold are valued at lower of cost or market value.

(f) Fixed Assets

Fixed Assets are stated at cost, net of accumulated depreciation. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.

(g) Depreciation

a) Depreciation on fixed assets is provided on the straight line method at the rates and in the manner specified in Schedule XIV of the Act.

b) Depreciation on additions/ deletions to/from fixed assets is provided on pro-rata basis from the date the asset is put to use/ discarded.

c) Individual Assets costing less than Rs.5000.00 are depreciated in full in the year of purchase.

(h) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of Profit and Loss. If at the Balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

(i) Investments

Investments are all long term, which are stated at cost. Provision for diminution in value thereof, other than temporary in nature, is accounted for.

(j) Borrowing Cost

a) Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets for the year up to the completion/installation or construction of such asset respectively are capitalized as part of the cost of such asset.

b) Borrowing costs directly attributable to projects under taken by the company are charged to each such project on year to year basis and is treated as cost of the project.

c) All other borrowing costs are charged to revenue in the year in which they are incurre

(k) Taxation

a) Current Tax

Provision for Income Tax is based on assessable profits of the company as computed in accordance with the relevant provision of the Income Tax Act, 1961 for the year ending 31st March 2014.

b) Deferred Tax

Deferred Tax is recognized on timing differences; being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is a virtual certainty of their realization and on other items when there is reasonable certainty of realization. The tax effect is calculated on the accumulated timing differences at the yearend based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

(l) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent Liability is disclosed for (1) Possible obligations which will be confirmed only by future events not wholly within the control of the company or (2) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in recognition of income that may not be realized in the near future.


Mar 31, 2013

(a) Basis of Accounting The financial statements are prepared under the historical cost convention, using accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the accounting standards notified under the companies (Accounting Standard) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (The Act)

(b) Use of Estimates The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates and any revision is recognized in the current and future periods.

(c) Revenue Recognition

Real Estate Projects Revenue from Real Estate Projects is recognized on the ''Percentage of Completion method'' (POC) of accounting. Revenue comprises of the aggregate amounts of sale contracts entered into and is recognized on the basis of percentage of actual costs incurred, including land and total estimated cost of projects under execution, subject to such cost being 25% or more of the total estimated cost. The estimates of the projected revenues, salable area and projected costs are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined. Where aggregate of the payments received provide insufficient evidence of Buyers commitment to make the complete payment, revenue is recognized only to the extent of realization. Whereas all income and expenses are accounted for on accrual basis, Interest on delayed payments by customers against dues is taken on realization owing to practical difficulties and uncertainties involved.

(d) Cost of construction / Development Accumulated project cost i.e. cost of construction / development comprises of: - a) Expenses directly related to the project. b) General Administration & Selling and Marketing costs that are attributable to the project in general and can be allocated to the project.

c) Finance Cost including interest and charges incurred up to the completion of the project are considered as attributable cost to the project and included under accumulated Project cost. Cost of Construction / Development is charged to statement of profit and loss in proportion to the project area sold for which revenue has been recognized Adjustments if required are made on completion of the respective projects.

(e) Inventory The Inventory comprises of lands, projects completed or under construction, building material in hand and rights in identified lands including: -

a) Work-in-progress comprises of land, materials, services and other overheads related to project under construction and is valued at cost.

b) Stock of building material is valued at cost. c) Completed units remaining unsold are valued at lower of cost or market value.

(f) Fixed Assets Fixed Assets are stated at cost, net of accumulated depreciation. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.

(g) Depreciation a) Depreciation on fixed assets is provided on the straight line method at the rates and in the manner specified in Schedule XIV of the Act.

b) Depreciation on additions/ deletions to/from fixed assets is provided on pro-rata basis from the date the asset is put to use /discarded.

c) Individual Assets costing less than Rs.5000.00 are depreciated in full in the year of purchase.

(h) Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

(i) Investments Investments are all long term, which are stated at cost. Provision for diminution in value thereof, other than temporary in nature, is accounted for.

(j) Borrowing Cost

a) Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets for the period up to the completion/installation or construction of such asset respectively are capitalized as part of the cost of such asset.

b) Borrowing costs directly attributable to projects undertaken by the company are charged to each such project on year to year basis and is treated as cost of the project. c) All other borrowing costs are charged to revenue in the year in which they are incurred.

(k) Taxation a) Current Tax Provision for Income Tax is based on assessable profits of the company as computed in accordance with the relevant provision of the Income Tax Act, 1961 for the period ending 31st March 2013.

k) Deferred Tax Deferred Tax is recognized 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 on unabsorbed tax losses and tax depreciation are recognized only when there is a virtual certainty of their realization and on other items when there is reasonable certainty of realization. The tax effect is calculated on the accumulated timing differences at the yearend based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

(l) Retirement Benefits Liability for gratuity and leave encashment is provided as at the end of each calendar year, as last year. Liability if any for three months period ending on each financial year get adjusted / accounted for as at the end of each calendar year.

(m)Provisions, Contingent Liabilities and Contingent Assets: Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent Liability is disclosed for (1) Possible obligations which will be confirmed only by future events not wholly within the control of the company or (2) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in recognition of income that may not be realized in the near future.


Dec 31, 2011

1. Basis of Accounting

The financial statements are prepared under the historical cost convention, using accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the accounting standards notified under the companies (Accounting Standard) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956 (The Act)

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates and any revision is recognized in the current and future periods.

3. Revenue Recognition

Real Estate Projects

Revenue from Real Estate Projects is recognized on the 'Percentage of Completion method' (POC) of accounting. Revenue comprises of the aggregate amounts of sale contracts entered into and is recognized on the basis of percentage of actual costs incurred, including land and total estimated cost of projects under execution, subject to such cost being 25% or more of the total estimated cost.

The estimates of the projected revenues, salable area and projected costs are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined.

Where aggregate of the payments received provide insufficient evidence of Buyers commitment to make the complete payment, revenue is recognized only to the extent of realization.

Whereas all income and expenses are accounted for on accrual basis, Interest on delayed payments by customers against dues is taken on realization owing to practical difficulties and uncertainties involved.

4. Cost of construction / Development

Accumulated project cost i.e. cost of construction / development comprises of: -

a) Expenses directly related to the project.

b) General Administration & Selling and Marketing costs that are attributable to the project in general and can be allocated to the project.

c) Finance Cost including interest and charges incurred up to the completion of the project are considered as attributable cost to the project and included under accumulated Project cost.

Cost of Construction / Development is charged to profit and loss account in proportion to the project area sold for which revenue has been recognized Adjustments if required are made on completion of the respective projects.

5. Inventory

The Inventory comprises of lands, projects completed or under construction, building material in hand and rights in identified lands including :-

a) Work-in-progress comprises of land, materials, services and other overheads related to project under construction and is valued at cost.

b) Stock of building material is valued at cost.

c) Completed units remaining unsold are valued at lower of cost or market value.

6. Fixed Assets

Fixed Assets are stated at cost, net of accumulated depreciation. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.

7. Depreciation

a) Depreciation on fixed assets is provided on the straight line method at the rates and in the manner specified in Schedule XIV of the Act.

b) Depreciation on additions/ deletions to/from fixed assets is provided on pro-rata basis from the date the asset is put to use/discarded.

c) Individual Assets costing less than Rs. 5000.00 are depreciated in full in the year of purchase.

8. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

9. Investments:

Investments are all long term, which are stated at cost. Provision for diminution in value thereof, other than temporary in nature, is accounted for.

10. Borrowing Cost

a) Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets for the period up to the completion/installation or construction of such asset respectively are capitalized as part of the cost of such asset.

b) Borrowing costs directly attributable to projects under taken by the company are charged to each such project on year to year basis and is treated as cost of the project.

c) All other borrowing costs are charged to revenue in the year in which they are incurred.

11. Taxation

a) Current Tax

Provision for Income Tax is based on assessable profits of the company as computed in accordance with the relevant provision of the Income Tax Act, 1961 for the year ending 31st December 2011.

b) Deferred Tax

Deferred Tax is recognized on timing differences; being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is a virtual certainty of their realization and on other items when there is reasonable certainty of realization. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

12. Retirement Benefits

a) Contributions payable by the Company to the concerned Government Authorities in respect of Provident Fund, Family Pension fund and Employee State Insurance are charged to the profit and loss account.

b) Provision for gratuity and Leave Encashment are made on actuarial valuation, as per Accounting Standard (AS)-15.

13. Accounting Standards

The Company follows all applicable accounting standards as required under Section 211 (3) (C) of the Act.

14. Preliminary Expenses

Preliminary expense of Rs. 1,03,868/- has been fully written off during the year on adoption of Accounting Standard (AS-26)

15. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent Liability is disclosed for (1) Possible obligations which will be confirmed only by future events not wholly within the control of the company or (2) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in recognition of income that may not be realized in the near future.


Dec 31, 2009

I) Basis of Accounting

The financial statements are prepared under the historical cost convention, using accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 (The Act) ii) Use of Estimates

The presentation of financial statement in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates and any revision is recognized in the current and future periods.

iii) Revenue Recognition

a) Real Estate Projects

Revenue from Real Estate Projects is recognized on the Percentage of Completion method (POC) of accounting. Revenue under the POC method is recognized on the basis of percentage of actual costs incurred, including land, construction and development cost of projects under execution subject to such actual cost being 25 percent of the total estimated cost of projects.

The state of completion under the POC method is measured on the basis of percentage that actual costs incurred on real estate projects including land, construction and development cost bears to the totatestimated cost of the project. The estimates of the projected revenues, projected profits, projected costs, cost to completion and the foreseeable loss are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined.

b) Interest due on delayed payments of installments from customers is accounted on receipt basis due to uncertainty of recovery. iv) Fixed Assets

Fixed Assets are stated at cost, less accumulated depreciation. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation. v) Depreciation

a) Depreciation on fixed assets is provided on the straight line method at the rates and as per the manner prescribed in Schedule XIV of the Act.

b) Depreciation on additions/ deletions to fixed assets is provided on pro-rata basis from the date the asset is put to use/ discarded.

c) Individual Assets costing less than Rs. 5000.00 are depreciated in full in the year of purchase. vi) Inventories

a) Building material and consumable stores are valued at lower of cost or market value on First in First out method.

b) Work in progress (Projects) including cost of land is valued at cost. vii) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. viii) Investments:

Investments are all long term which are stated at cost. Provision for diminution in value thereof, other than temporary in nature, is accounted for.

ix) Borrowing Cost

a) Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets for the period up to the completion/installation or construction of such asset respectively are capitalized as part of the cost of such asset.

b) Borrowing costs directly attributable to projects under taken by the company are charged to each such project on year to year basis and is treated as cost of the project.

c) All other borrowing costs are charged to revenue in the year in which they are incurred.

x) Current Year Taxation

a) (i) Provision for Income Tax is based on assessable profits of the company as computed in accordance with the relevant provision of the Income Tax Act, 1961 for the year ending 31s December 2009.

(ii) The company is entitled for availing exemption from income tax under section 80IB (10) of the Income Tax Act, 1961 on its two projects.

b) Deferred Tax

Deferred Taxation is provided using the liability method in respect of the tax effect arising from all material timing differences between the accounting and tax treatment of Income and expenditure which are expected with reasonable probability to crystallize in foreseeable future. Deferred tax benefits are recognized in the financial statements only to the extent of any deferred tax liability or when such benefits are reasonably expected to be realizable in the near future.

xi) Retirement Benefits

a) Contributions payable by the Company to the concerned Government Authorities in respect of Provident Fund, Family Pension fund and Employee State Insurance are charged to the profit and loss account.

b) Provision for gratuity and Leave Encashment is made on actuarial valuation, as per Accounting Standard (AS)-15. xii) Accounting Standards

The Company follows all applicable accounting standards as required under Section 211 (3) (C) of the Act.

xii) Provisions, contingent liabilities and Contingent Assets:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent Liability is disclosed for (1) Possible obligations which will be confirmed only by future events not wholly within the control of the company or (2) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in recognition of income that may not be realized in the near future.

xiv) Preliminary Expenses

Preliminary expenses are being amortized in ten annual equated installments.

 
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