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Accounting Policies of Super Tex Industries Ltd. Company

Mar 31, 2015

(a) Basis of Preparation of Financial Statements: These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current/ non current classification of assets and liabilities.

(b) Use of estimates: The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition: Sales are recognized as soon as goods are dispatched to customers and are net of returns, discounts and sales tax but includes freight in case of CIF export contracts. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Borrowing Costs: Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borrowing costs are recognised in the of Profit and Loss in the year in which they are incurred.

(e) Inventories : Raw material is valued at weighted average cost, stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(f) Fixed Assets: Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(g) Method of Depreciation and Amortisation:

(i) Depreciation on Factory Building, Plant and Machinery, Electrical Installations and Equipment is provided on a Straight Line Method and in case of other assets on Written Down Value Method, over the estimated useful life of assets.

(ii) Effective 1st April, 2014, the Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act, as against the earlier practice of depreciating at the rates prescribed in Schedule XIV of the Companies Act, 1956.

(iii) Cost of Software capitalized is amortised over a period of three years.

(iv) Depreciation on additions to assets or on sale/discardment of assets is calculated pro rata from the month of such addition or upto the month of such sale / discardment, as the case may be.

(h) Leases:

As a lessee :

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease or other systematic basis more representative of the time pattern of the user's benefits.

As a lessor:

The Company has leased certain tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term or other systematic basis over the lease term which is more representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.

(i) Investments: Investments that are readily realisable and are intended to be held for not more than one year from the date of investment are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments,such reduction being determined and made for each investment individually.

(j) Accounting for taxes: Provision for tax is made and retained in the accounts considering the taxable income for the relevant years, assessment orders and decisions of appellate authorities in the Company's case. 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.

(k) Foreign currency transactions:

(i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction, except transactions covered by forward contracts, which are recorded at the forward contract rates.

(ii) Monetary assets and liabilities, if any, at the year end are restated at the year end rates and exchange rate gains and losses are recognised in the Statement of Profit and Loss.

(l) Earnings 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. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares.

(m) Employees benefits:

(i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives.

(ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using acturial valuation techniques. Acturial gains and losses are recognized in full in the Profit and Loss account for the period In which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(n) Impairment of Assets: An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

(o) Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognised 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 liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

(p) Segment Reporting: The Company deals in only one segment i.e."Textiles". However, as per Accounting Standard (AS) 17 on Segment Reporting the Company has identified and reported "Domestic" and "International" as primary business segments.


Mar 31, 2014

(a) Basis of Preparation of Financial Statements : The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards and the relevant provisions of the Companies Act, 1956.

(b) Use of estimates : The preparation of finanial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition : Sales are recognized on despatch to customers and are net of returns, discounts and sales tax but includes freight in case of CIF export contracts. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Borrowing Costs : Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.

(e) Inventories : Raw material is valued at weighted average cost, stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(f) Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(g) Leases : In respect of assets taken on lease by the Company, where the Company has substantially all the risks and rewards of ownership, are classified as finance lease. Such a lease is capitalised at the lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised as revenue expenses.

(h) Depreciation : Depreciation on fixed assets other than freehold land and capital work-in-progress is being provided on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(i) Investments : Investments that are readily realisable and are intended to be held for not more than one year from the date of investment are classified as current investments. All the other investments are classified as long-term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temperory, in the value of the investments, such reduction being determined and made for each investment individually.

(j) Accounting for taxes : Provision for tax is made and retained in the accounts considering the taxable income for the relevant years, assessment orders and decisions of appellate authorities in the Company''s case. 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.

(k) Foreign currency transactions : (i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction, except transactions covered by forward contracts, which are recorded at the forward contract rates. (ii) Monetary assets and liabilities, if any, at the year end are restated at the year end rates and exchange rate gains and losses are recognised in the Statement of Profit and Loss.

(l) Earnings 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. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares.

(m) Employees benefits : (i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives. (ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using acturial valuation techniques. Acturial gains and losses are recognized in full in the Profit and Loss account for the period In which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(n) Impairment of Assets : An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is changed to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

(o) Provisions, Contingent Liabilities and Contingent Assets : Provisions involving substantial degree of estimation in measurement are recognised 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 liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

(p) Segment Reporting : The Company deals in only one segment i.e.''Textiles1''. However, as per Accounting Standard (AS)17 on Segment Reporting the Company has identified and reported "Domestic" and "International" as primary business segments.


Mar 31, 2013

1. Significant Accounting Policies :

(a) Basis of Preparation of Financial Statements : The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards and the relevant provisions of the Companies Act, 1956.

(b) Use of estimates : The preparation of finanial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition : Sales are recognized on despatch to customers and are net of returns, discounts and sales tax. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Borrowing Costs : directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.

(e) Inventories : Raw material is valued at weighted average cost, stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(f) Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(g) Leased Assets : Finance Leases - The lower of the fair value of the assets and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Profit and Loss account. Operating Leases - Rentals are expensed with reference to lease terms and other considerations.

(h) Depreciation : Depreciation of fixed assets is being provided on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(i) Investments : that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All the other investments are classified as long-term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temperory, in the value of the investments,such reduction being determined and made for each investment individually.

(j) Accounting for taxes : Provision for tax is made and retained in the accounts considering the taxable income for the relevant years, assessment orders and decisions of appellate authorities in the Company''s case. 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.

(k) Foreign currency transactions : (if any) are entered as per the exchange rate prevailing on the date of transaction, Foreign currency assets, and liabilities covered by forward contracts, (if any), are stated at the forward contract rates ruling at the year end. Other exchange differences are dealt with in the Profit and Loss Account.

(l) Earnings 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. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares.

(m) Employees benefits : (i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives. (ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using acturial valuation techniques. Acturial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(n) Impairment of Assets : An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is chaged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

(o) Provisions, Contingent Liabilities and Contingent Assets : Provisions involving substantial degree of estimation in measurement are recognised 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 liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

(p) Segment Reporting : The Company deals in only one segment i.e."Textiles". However, as per Accounting Standard (AS)17 on Segment Reporting the Company has identified and reported "Domestic" and "International" as primary business segments.


Mar 31, 2012

(a) Basis of Preparation of Financial Statements : The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards and the 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 balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition : Sales are recognized on despatch to customers and are net of returns, discounts and sales tax. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Inventories : Raw material is valued at weighted average cost, stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(e) Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(f) Leased Assets : Finance Leases- The lower of the fair value of the assets and present value of minimum lease rentals is capitalised as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Profit and Loss account.

(g) Depreciation : Depreciation of fixed assets is being provided on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(h) Accounting for taxes : Provision for tax is made and retained in the accounts considering the taxable income for the relevant years, assessment orders and decisions of appellate authorities in the Company's case. 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.

(i) Foreign currency transactions (if any) are entered as per the exchange rate prevailing on the date of transaction, Foreign currency assets, and liabilities covered by forward contracts, (if any), are stated at the forward contract rates ruling at the year end. Other exchange differences are dealt with in the Profit and Loss Account.

(j) Earnings 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. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares.

(k) Employees benefits : (i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives. (ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(l) Impairment of Assets : An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

(m) Provisions, Contingent Liabilities and Contingent Assets : Provisions involving substantial degree of estimation in measurement are recognised 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 liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

(a) Basis of Preparation of Financial Statements : The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards and the 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 balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition : Sales are recognized on despatch to customers and are net of returns, discount and sales tax. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Inventories : Raw material is valued at weighted average cost, Stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(e) Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(f) Depreciation : Depreciation on fixed assets is being provided on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(g) Accounting for taxes : Provision for tax is made and retained in the accounts considering the taxable income for the relevant year, assessment orders and decisions of appellate authorities in the Company's case. 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.

(h) Foreign currency transactions (if any) are entered as per the exchange rate prevailing on the date of transaction. Foreign currency assets, and liabilities covered by forward contracts,(if any), are stated at the forward contract rates ruling at the year end. Other exchange differences are dealt with in the Profit and Loss Account.

(i) Employee benefits : (i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives. (ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using acturial valuation techniques. Acturial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(j) Impairment of Assets : An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.


Mar 31, 2010

(a) Basis of Preparation of Financial Statements : The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles, the Accounting Standards and the 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 balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

(c) Revenue Recognition : Sales are recognized on despatch to customers and are net of returns, discount and sales tax. Other Income and Expenditure are recognized and accounted on accrual basis.

(d) Inventories : Raw material is valued at weighted average cost, Stock in process at manufacturing cost based on weighted average cost of raw material and overhead upto relevant stage of completion, stores and spares at cost and finished goods at lower of cost of production and net realisable value. Purchased finished goods are valued at cost and by-products and waste are valued at net realisable value.

(e) Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency loans obtained to purchase fixed assets are included in the cost of such assets.

(f) Depreciation : Depreciation on fixed assets is being provided on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

(g) Accounting for taxes : Provision for tax is made and retained in the accounts considering the taxable income for the relevant year, assessment orders and decisions of appellate authorities in the Companys case. 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.

(h) Foreign currency transactions (if any) are entered as per the exchange rate prevailing on the date of transaction. Foreign currency assets, and liabilities covered by forward contracts,(if any), are stated at the forward contract rates ruling at the year end. Other exchange differences are dealt with in the Profit and Loss Account.

(i) Employee benefits : (i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives. (ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using acturial valuation techniques. Acturial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur. Liability in respect of gratuity to employees is covered under the group gratuity scheme with the Life Insurance Corporation of India and premium paid is debited to the Profit and Loss Account.

(j) Impairment of Assets : An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.