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Accounting Policies of Shah Construction Company Ltd. Company

Mar 31, 2013

A) BASIS OF PREPARATION:

The Company follows the Mercantile System of Accounting and recognizes Income and Expenditure on accrual basis except (i) Gratuity and bonus are accounted on payment basis and (ii) Rates of Foreign Exchange are adopted as on 30.06.84 in respect of current assets and current liabilities. Revenue recognition is on the basis of periodical bills made as per contract terms. In respect of other items, accrual basis is followed based on reasonable certainty of the receipt of income. The accounts are prepared on Historical cost basis and as going concern. Accounting policies not referred to otherwise are consistent with generally accepted accounting principles and comply in all material aspects with the accounting standards notifies under section 211(3C) and other relevant provisions of the companies act, 1956

b) USE OF ESTIMATES:

The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

c) FIXED ASSETS & DEPRECIATION:

Fixed Assets are stated at their original costs adjusted by revaluation of certain Land and Buildings less accumulated depreciation. In respect of Fixed Assets purchased in Foreign currency, these have been stated at the values prevailing at the time of purchase.

Depreciation is provided at the rates and in the manner prescribed in Schedule XIV to the Companies Act,1956.

d) The Company makes full provision for all known expenses and liabilities. Profit on Sale of long term assets is credited to Capital Reserve Account.

e) Earnings/losses on bills under Arbitration are adjusted as and when the awards in respect thereof are given and approved.

f) INVESTMENTS:

Long term investments are stated at Cost. Current investments are carried at lower of Cost & Market value.

g) FOREIGN CURRENCY TRANSACTIONS:

i) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

ii) Monetary items denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates and those covered by forward exchange contracts are translated at the rate ruling at the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference having been recognised over the life of the contract.

iii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account. Adjustments arising from exchange rate variations attributable to the fixed assets are capitalised.

iv) The Company has valued its Current Assets, Current Liabilities and loans in foreign Currency at the rate prevailing as on 30.06.1984. The rates as on 31.03.2013 are not available due to United Nations Embargo.

h) INVENTORIES :

Stores are valued at lower of cost or market value. Work-in-Progress is valued at direct cost incurred at every construction site. No Head office overheads are added thereon.


Mar 31, 2012

A) BASIS OF PREPARATION:

The Company follows the Mercantile System of Accounting and recognizes Income and Expenditure on accrual basis except (i) Gratuity and bonus are accounted on payment basis and (ii) Rates of Foreign Exchange are adopted as on 30.06.84 in respect of current assets and current liabilities. Revenue recognition is on the basis of periodical bills made as per contract terms. In respect of other items' accrual basis is followed based on reasonable certainty of the receipt of income. The accounts are prepared on Historical cost basis and as going concern. Accounting policies not referred to otherwise are consistent with generally accepted accounting principles and comply in all material aspects with the accounting standards notifies under section 211(3 C) and other relevant provisions of the companies act' 1956

b) USE OF ESTIMATES:

The preparation of Financial Statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

c) FIXED ASSETS & DEPRECIATION:

Fixed Assets are stated at their original costs adjusted by revaluation of certain Land and Buildings less accumulated depreciation. In respect of Fixed Assets purchased in Foreign currency' these have been stated at the values prevailing at the time of purchase.

Depreciation is provided at the rates and in the manner prescribed in Schedule XrV to the Companies Act' 1956.

d) The Company makes full provision for all known expenses and liabilities. Profit on Sale of long term assets is credited to Capital Reserve Account.

e) Earnings/losses on bills under Arbitration are adjusted as and when the awards in respect thereof are given and approved.

f) INVESTMENTS:

Long term investments are stated at Cost. Current investments are carried at lower of Cost & Market value.

g) FOREIGN CURRENCY TRANSACTIONS:

i) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

ii) Monetary items denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates and those covered by forward exchange contracts are translated at the rate ruling at the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction' such difference having been recognised over the life of the contract.

iii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account. Adjustments arising from exchange rate variations attributable to the fixed assets are capitalised.

iv) The Company has valued its Current Assets' Current Liabilities and loans in foreign Currency at the rate prevailing as on 30.06.1984. The rates as on 31.03.2012 are not available due to United Nations Embargo.

h) INVENTORIES;

Stores are valued at lower of cost or market value. Work-in-Progress is valued at direct cost incurred at every construction site. No Head office overheads are added thereon.


Mar 31, 2010

1. The Company follows the Mercantile System of Accounting and recognises Income and Expenditure on accrual basis except (i) Gratuity and bonus are accounted on payment basis (ii) Provisions of depreciation made for the year as per provisions of Schedule xiv of the Companies Act, 1956 (iii) Rates of Foreign Exchange are adopted as on 30.06.84 in respect of current assets and current liabilities Revenue recognition is on the basis of periodical bills made as per contract terms. In respect of other items, accrual basis is followed based on reasonable certainty of the receipt of income. The accounts are prepared on Historical cost basis and as going concern. Accounting policies not referred to otherwise are consistent with generally accepted accounting principles.

2. Fixed Assets are stated at their original costs adjusted by revaluation of certain Land and Buildings. In respect of Fixed Assets purchased in Foreign currency, these have been stated at the values prevailing at the time of purchase.

3. The Company makes full provision for all known expenses and liabilities but does not take into account expected future profits/losses in respect of on going jobs. However, Accounting Standards requires that the provision for anticipated profit/losses if any on contracts etc. must be provided for Profit on Sale of long term assets is credited to Capital Reserve Account.

4. Earnings/losses on bills under Arbitration are adjusted as and when the awards in respect there of are given and approved.

5. INVESTMENTS:

Investments are stated at cost.

6. INVENTORIES:

Stores are valued at lower of cost or market value. Work-in-Progress is valued at direct cost incurred at every construction site. No Head office overheads are added thereon.

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