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Accounting Policies of Vintage Cards & Creations Ltd. Company

Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956. The Company follows the mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. FIXED ASSETS

Fixed Assets are stated at cost. Cost includes purchase price net of excise duty and taxes recoverable, where claimed, interest on amount borrowed for acquisition of assets, for the period up to the date the asset is ready to be put to use and incidental expenses related to bringing the assets to working condition for their intended use.

Capital work in progress is stated at cost. Cost includes expenses incurred during preoperative / installation period, cost of capital goods in transit and advances to suppliers.

3. DEPRECIATION ON FIXED ASSETS

Depreciation on Fixed Assets has been provided on the Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

In respect of additions to the assets made during the year, depreciation for the year is calculated from the date of such addition (except in respect of those assets costing up to Rs.5,000/- which are, depreciated 100% in the year of addition). Depreciation on assets disposed off during the year is charged up to the date of disposal.

4. INVENTORY VALUATION

Raw materials are valued at cost, which is determined on First In First Out basis. Cost includes the purchase price, duties and taxes (net of duties and taxes recoverable).

Work in progress is valued at factory cost consisting of direct material and labour cost together with related factory overheads.

Finished goods manufactured by the Company are valued at lower of cost or net realizable value.

5. INVESTMENTS

Long-term investments are valued at cost less provision for diminution in value, if the diminution is other than temporary.

6. SUNDRYDEBTORS/LOANS AND ADVANCES

Sundry Debtors and Loans and Advances are stated after making adequate provision for doubtful debts / advances.

7. FOREIGN EXCHANGE TRANSACTIONS

Transactions in foreign currencies are recorded at the rate of exchange prevailing on the date of the transaction and subsequent gains / losses are recognized on realization.

Monetary assets and liabilities relating to foreign currency transactions remaining unsettled at the end of the year are translated at year-end rates. The difference in translation of monetary assets and liabilities on foreign exchange transactions are recognized in the Profit and Loss Account for the year.

8. REVENUE RECOGNITION

Revenue from sale of goods is recognized on dispatch to customers or duly authorized agent or transporter. Sales are net of sales tax recovered, sales returns, trade discounts, rebates and allowances.

9. EMPLOYEE BENEFITS

Employee benefits comprise payments under defined contribution plans like provident fund and family pension. Payments under defined contribution plans are charged to the profit and loss account. The liability in respect of defined benefit schemes like gratuity and leave encashment benefit on retirement is provided on the basis of actuarial valuation at the end of each year.

10. RESEARCH AND DEVELOPMENT

Revenue Expenditure on Research and Development is charged under the respective heads of account. Capital Expenditure on Research and Development is included as part of Fixed Assets and depreciated on the same basis as the other Fixed Assets.

11. IMPAIRMENT OF ASSETS

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

12. INCOME TAX

Income taxes have been computed using the tax effect accounting method, where taxes are accrued in the same period as the related revenue and expenses. . Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to timing differences between the taxable income and the accounting income for a period. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the timing differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities is recognized in the statement of income in the period of change. Deferred tax assets are recognized only to the extent management is virtually certain as to the sufficiency of future taxable income against which the deferred tax asset can be realized.

13. PROVISIONS AND CONTINGENCIES

Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated. Where no reliable estimate can be made as to the outcome of an event, a disclosure is made as contingent liability. Contingent assets are not recognised in the accounts.

A provision is recognized when the company has present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the same. Provisions are determined based on the best estimates required to settle the obligation at the balance sheet date.

14. EARNING PER SHARE

The basic earnings per share is computed by dividing the net profit after tax for the year by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit after tax for the year and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

15. LEASES

Operating lease:

Lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term is classified as operating lease. Operating lease payments are recognized as an expense in the Profit and Loss Account.

 
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