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Accounting Policies of Purohit Construction Ltd. Company

Mar 31, 2014

1. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS:

a. The financial statements have been prepared and presented under the historical cost convention and materially comply with the accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, unless stated otherwise.

b. Company generally follows mercantile system of accounting, recognizing significant items of income and ex- penditure on accrual basis except in the case of income from investments, income by way of extra work receipts, and income by way of sales of scrap, expenses by way of retirement benefits to employees, which are recognized on cash basis.

2. USE OF ESTIMATES:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of income and expenses of the period, assets and liabilities and disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from those estimated. Any revision to accounting estimates is recognized prospectively in future periods.

3. FIXED ASSETS:

Fixed assets are stated at "HISTORICAL COST" inclusive of cost of acquisition and directly attributable costs such as freight, installation, etc. incurred for bringing the assets to their working conditions, except that in the case of office building and furniture and fixtures which are stated at revalued amount.

4. DEPRECIATION:

Depreciation on Fixed Assets has been provided on "STRAIGHT LINE METHOD" at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956. Depreciation in the case of any additions/deletions has been provided on pro-rata basis. Depreciation on the revalued part comprised in value of assets is charged to the revaluation reserve created out of revaluation of those fixed assets.

5. INVESTMENTS:

Investments being long term in nature are stated at "COST". No provision is made for any diminution in the value of the same

6. VALUATION OF INVENTORIES:

a. Inventory of building materials is valued at cost.

b. Work in progress at the 31/03/2014 has been verified, valued and certified by the management based on the terms of agreement with the respective principals.

c. Inventory by way of land held for development of project is valued at cost of acquisition along with ancillary expenses.

7. REVENUE RECOGNITION / ACCOUNTING FOR CONSTRUCTION CONTRACTS:

a. In respect of the construction contracts on hand, company recognizes revenue at the year end on the basis of "PERCENTAGE OF WORK COMPLETION" method based on the amounts admitted by principals or certified by the Architect till the year end in accordance with the agreements entered into with the principal.

b. In case of sale of goods the revenue is recognized upon dispatch of goods.

c. In case of sales of securities the revenue is recognized upon executing contract in that respect.

8. CASHFLOW STATEMENTS:

The cash flow statement is prepared showing differently, the cash flow from Operating Activities, Investing Activi- ties and Financing Activities during the year.

9. PRIOR PERIOD ITEMS:

Material items related to earlier period, to the extent distinctly identifiable, are accordingly accounted.

10. EMPLOYEE BENEFITS:

a. Company''s contribution to Provident Fund is charged to Profit & Loss account.

b. Gratuity, Leave Encashment and other retirement benefits payable to employees are accounted for on cash basis.

11. RELATED PARTY DISCLOSURES:

The disclosure in respect of names, relationship, nature and volume of transactions with related parties is made in the accounts. The disclosure has been made by the management which has been relied upon by the auditors.

12. EARNINGS PER SHARE:

Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

13. ACCOUNTING FOR TAXES ON INCOME:

Tax expense for a year comprises of current tax and deferred tax. Current tax is measured after taking into consideration, the deductions and exemptions admissible under relevant provisions of the Income Tax Act, 1961.

Deferred Tax, which is computed on the basis of enacted/ substantially enacted rates, 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 are recognized only to the extent there Is reasonable certainty of realization thereof in future.

14. IMPAIRMENT OF ASSETS:

As per an assessment carried out by the management as on the balance sheet date, there is no indication of any substantial loss on account of overall impairment in the value of the assets. In the opinion of the manage- ment the assets are likely to recover the value at which these are stated in the accounts, on an overall basis.

15. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements. Contingent Liabilities if material are disclosed by way of Notes.

16. SALES TURNOVER:

Sales Turnover for the period is exclusive of duties and taxes to the extent applicable and is net of sales return.

17. EXPENSES:

Material known liabilities are provided for on the basis of available information/estimates at the period end.

18. BORROWING COSTS:

Borrowing Costs specifically identified to the acquisition or construction of qualifying assets is capitalized as part of cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to Profit and Loss Account.

19. SEGMENT REPORTING:

The management has identified two business segments viz, Real estate development/contracting and Securi- ties trading for the reported period. Details of turnover, carrying cost of assets, capital employed, & expenses and profit/loss in respect of each of the above segments is marked as Annexure hereto.


Mar 31, 2013

BASIS FOR PREPARATION OF FINANCIAL STATEMENTS:

a. The financial statements have been prepared and presented under the historical cost convention and materially comply with the accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, unless stated otherwise.

b. Company generally follows mercantile system of accounting, recognizing significant items of income and expenditure on accrual'basis except in the case of income from investments, income by way of extra work receipts, and income by way of sales of scrap, expenses by way of retirement benefits to employees, which are recognized on cash basis.

2. USE OF ESTIMATES:

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of income and expenses of the period, assets and liabilities and disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from those estimated. Any revision to accounting estimates is recognized prospectively in future periods.

3. FIXED ASSETS:

Fixed assets are stated at "HISTORICAL COST" inclusive of cost of acquisition and directly attributable costs such as . freight, installation, etc. incurred for bringing the assets to their working conditions, except that in the case of office building and furniture and fixtures which are stated at revalued amount.

4. DEPRECIATION:

Depreciation on Fixed Assets has been provided on "STRAIGHT LINE METHOD" at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956. Depreciation in the case of any additions/deletions has been provided on pro-rata basis. Depreciation on the revalued part comprised in value of assets is charged to the revaluation reserve created out of revaluation of those fixed assets.

5. INVESTMENTS:

Investments being long term in nature are stated at "COST". No provision is.made for any diminution in the value Of the same._

6. VALUATION OF INVENTORIES:

a. Inventory of building materials is valued at cost.

b. Work in progress at the year-end has been verified, valued and certified by the management based on the terms of agreement with the respective principals.

c. Inventory by way of land held for development of project is valued at cost of acquisition alognlwith ancilliary expenses. .

7. REVENUE RECOGNITION / ACCOUNTING FOR CONSTRUCTION CONTRACTS: '

a. In respect of the construction contracts on hand, company recognizes revenue at the year end on the basis of "PERCENTAGE OF WORK COMPLETION" method based on the amounts admitted by principals or certified by the Architect till the year end in accordance with the agreements entered into with the principal.

b. In case of sale of goods the revenue is recognized upon dispatch of goods.

c. Income by way of compensation for surrender of development nght is recognized upon execution of agreement in that respect.

d. In case of, sale of shares and securities upon execution of contract in that respect.

e. In case of, intraday dealing as well as derivatives, upon completion of the contact.

8. CASH FLOW STATEMENTS:

The cash flow statement is prepared showing differently, the cash flow from Operating Activities, Investing Activities and Financing Activities during the year.

9. PRIOR PERIOD ITEMS:

Material items related to earlier period, to the extent distinctly identifiable, are accordingly accounted.

10. EMPLOYEE BENEFITS:

a. Company's contribution to Provident Fund is charged to Profit & Loss account.

b. Gratuity, Leave Encashment and other retirement benefits payable to employees are accounted for on cash basis.

7T. RELATED PARTY DISCLOSURES:

The disclosure in respect of names, relationship, nature and volume of transactions with related parties is made in the accounts. The disclosure has been made by the management which has been relied upon by the auditors.

2. EARNINGS PER SHARE:

Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

TT ACCOUNTING FOR TAXES ON INCOME:

Tax expense for a year comprises of current tax and deferred tax Current tax is measured after taking into consideration, the deductions and exemptions admissible under relevant provisions of the Income Tax Act, 1961.

Deferred Tax, which is computed on the basis of enacted/ substantially enacted rates, 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 are recognized only to the extent there is reasonable certainty of realization thereof in future. ,

TT IMPAIRMENT OF ASSETS:

As per an assessment carried out by the management as on the balance sheet date, there is no indication of any substantial loss on account of overall impairment in the value of the assets. In the opinion of the management the assets are likely to recover the value at which these are stated in the accounts, on at) overall basis. -

TsT PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS: '

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements. Contingent Liabilities if material are disclosed by way of Notes.

SALES TURNOVER: :

Sales Turnover for the year is exclusive of duties and taxes to the extent applicable and is net of sales return.

EXPENSES:

Material known liabilities are provided for on the basis of available information/estimates at the year end.

BORROWING COSTS:

Borrowing Costs specifically identified to the acquisition or construction of qualifying assets is capitalized as part of cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get. ready for intended use. All other borrowing costs are charged to Profit and Loss Account.

SEGMENT REPORTING":

The management has identified two business segments it is operating in, viz, Construction and Trading. Details of turnover, carrying cost of assets, capital employed, & expenses and profit/loss in respect of each of the above segments are being reported.

 
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