Accounting Policies of NovaGold Petro-Resources Ltd. Company

Mar 31, 2014

[1] BASIS OF ACCOUNTING:

The financial statement are prepared under historical cost convention on accrual method of accounting and are in accordance with the requirements of the Companies Act, 1956 except some of the government and statutory benefits, expenses like Provident Fund, Employee state Insurance, Professional Tax which are recorded on cash basis.

[2] FIXED ASSETS:

To state Fixed Assets at cost of acquisition inclusive of inward freight duties and taxes and incidental expenses related to acquisition. Expenditure incurred in purchase of Fixed Assets which are yet to be erected, installed and Commissioned along with other expenditure incurred are treated Capital Work-in-progress.

[3] VALUATION OF INVENTORY:

Stock of Raw Material have been valued at fixed cost, Stock of Work-in-Process have been valued at cost estimated cost of production. Finished Goods have been valued at Selling Price estimated profit; Stores & Spares has been valued at of cost.

[4] DEPRECIATION:

Depreciation has been provided on straight line method at the rate prescribed under the Schedule XIV of the Companies Act, 1956.

[5] EXPENDITURE DURING CONSTRUCTION PERIOD:

Expenditure during Construction period inclusive of depreciation on Assets used Construction Period and interest on loans net after deducting interest earned on temporary deposits has been allocated proportionately on the respective Fixed Assets.

[6] CENTRAL EXCISE:

The refund of excise in form of Modvat credit available on input of material as per excise law are deducted from the landed cost of the materials.

[7] RECOGNITION OF INCOME AND EXPENDITURE:

Revenues/Incomes and Costs/Expenditures are generally accounted as they are earned and incurred. However no provision has been made for Bonus and gratuity liability. The Company has the practice of accounting it at the time of making actual payment of the same.

[8] FOREIGN CURRENCY TRANSACTIONS:

Foreign Currency Transactions are accounted on the basis of Rate of Exchange charged by the Custom authority while preparing the Bills of lading.

[9] EMPLOYEE BENEFITS:

The liability towards provident Fund is not yet applicable to the Company.

[10] CONTINGENT LIABILITY:

Contingent Liability is provided on the basis demand made upon the Company.

[11] INVESTMENTS :

Investments are valued at the acquisition cost.

[12] DEFERRED TAX:

Deferred Tax is the Timing differences between taxable income & accounting income for a period that originated in one period and are capable of reversal in one or more subsequent period.

During the year under review there is no Deferred Tax liabilities but there is differed Tax Asset.

[13] RELATED PARTY DISCLOSURES:

There is no related party transactions as per Accounting Standard 18 as issued by ICAI.

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Mar 31, 2012

[1] BASIS OF ACCOUNTING:

The financial statement are prepared under historical cost convention on accrual method of accounting and are in accordance with the requirements of the Companies Act, 1956 except some of the government and statutory benefits, expenses like Provident Fund, Employee state Insurance, Professional Tax which are recorded on cash basis.

[2] FIXED ASSETS:

To state Fixed Assets at cost of acquisition inclusive of inward freight duties and taxes and incidental expenses related to acquisition. Expenditure incurred in purchase of Fixed Assets which are yet to be erected, installed and Commissioned along with other expenditure incurred are treated Capital Work-in- progress.

[3] VALUATION OF INVENTORY:

Stock of Raw Material have been valued at fixed cost, Stock of Work-in-Process have been valued at cost estimated cost of production. Finished Goods have been valued at Selling Price estimated profit; Stores & Spares has been valued at of cost.

[4] DEPRICIATION:

Depreciation has been provided on straight line method at the rate prescribed under the Schedule XIV of the Companies Act, 1956.

[5] EXPENDITURE DURING CONSTRUCTION PERIOD:

Expenditure during Construction period inclusive of depreciation on Assets used Construction Period and interest on loans net after deducting interest earned on temporary deposits has been allocated proportionately on the respective Fixed Assets.

[6] CENTRAL EXCISE:

The refund of excise in form of Modvat credit available on input of material as per excise law are deducted from the landed cost of the materials.

[7] RECOGNITION OF INCOME AND EXPENDITURE:

Revenues/Incomes and Costs/Expenditures are generally accounted as they are earned and incurred. However no provision has been made for Bonus and gratuity liability. The Company has the practice of accounting it at the time of making actual payment of the same.

[8] FOREIGN CURRENCY TRANSECTIONS:

Foreign Currency Transactions are accounted on the basis of Rate of Exchange charged by the Custom authority while preparing the Bills of lading.

[9] EMPLOYEE BENEFITS:

The liability towards provident Fund is not yet applicable to the Company.

[10] CONTINGENT LIABILITY:

Contingent Liability is provided on the basis demand made upon the Company.

[11] INVESTMENTS :

Investments are valued at the acquisition cost.

[12] DEFEREED TAX:

Deferred Tax is the Timing differences between taxable income & accounting income for a period that originated in one period and are capable of reversal in one or more subsequent period.

During the year under review there is no Deferred Tax liabilities but there is differed Tax Asset.

[13] RELATED PARTY DISCLOSURES:

There is no related party transactions as per Accounting Standard 18 as issued by ICAI.

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Mar 31, 2010

[1] BASIS OF ACCOUNTING

The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the Indian Accounting Standards & the relevant provisions of the Companies Act, 1956.

The financial statements are prepared under historical cost convention and on the basis of going concern.

The Company follows the mercantile system of accounting and income & expenditure are recognized on accrual basis.

[2] REVENUE RECOGNITION

Revenue from sale of goods /consultancy service are recognised when the sales / services have been completed with passing of titles.

[3] FIXED ASSETS

All fixed assets are stated at cost. All costs attributable to bring the fixed assets to a working condition are capitalized. During the year all Fixed Assets were disposed off and Furniture as new Assets has been purchased by the Company.

[4] DEPRICIATION

Depreciation on fixed assets is provided on straight-line basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

[5] RETIREMENT BENEFIT

Contributions as required under Employees Provident Fund & Miscellaneous Provisions Act are accounted on receipt basis, if any.

[6] CAPITAL WORK-IN-PROGRESS

Advances paid for acquisition of fixed assets and the cost of assets not put to use before the year end are used to be disclosed under Capital Work-in-Progress as per the policy of the company.

[7] INVESTMENTS

Investments made on a long-term basis are valued at cost. Provision, if any, is made to recognize a decline other than a temporary decline in the value of long-term investments.

[8] INVENTORIES

Inventories are valued at lower of cost or net realized value. Cost is computed on FIFO basis. This significant component of Inventories is Liquefied Petroleum Gas. Loss on evaporation during filling and refilling is considered not material and hence not identified separately for accounting purpose.

[9] ACCOUNTING FOR INCOME TAX

Income-tax expenses is accounted in accordance with AS-22 "Accounting, for taxed on Income" which includes current taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between taxable income and accounting year and reversal of timing differences of earlier years. Deferred tax assets are recognised only to the extent that there is reasonable / virtual certainty that sufficient future taxable income will be available.

[10] MISCELLANEOUS EXPENDITURE

Deferred revenue Expenditure will be return off over the period during which benefits there from are expected to be derived.