Accounting Policies of Sonal Mercantile Ltd. Company

Mar 31, 2019

1. Summary of significant accounting policies

a. Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as on the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any differences of actual results to such estimates are recognized in the period in which the results are known/ materialized.

b. Changes in accounting policy:

Accounting policies unless specifically stated to be otherwise are consistent and are in accordance with generally accepted accounting principles.

c. Revenue recognition:

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company & revenue is reliably measured. Accordingly wherever there is uncertainty in the realization of income, the same is not accounted for till such time the uncertainty is resolved.

Income from sale of shares is recognized on the execution of the transaction on the stock exchange. All expenses are accounted for on accrual basis. Interest income is recognized on time proportionate basis starting from the date of disbursement of loan.

d. Property, plant & equipment:

Property, plant & equipment are stated at cost of acquisition or construction net of taxes which are subject to input tax credit as reduced by accumulated depreciation thereon. The cost of assets comprises of its purchase price and any directly attributable cost of bringing the assets to their location and working condition upto the date of its intended use.

e. Depreciation:

Property, plant & equipment are depreciated on written down value method over the estimated useful lives of the assets considering the guidelines of Part C of Schedule II to the Companies Act, 2013.

f. Valuation of Inventories:

Inventories of stock in trade are valued at cost or net realizable value whichever is lower. Net realizable value is the estimated selling price in the ordinary course less the estimated cost of completion and the estimated costs necessary to make the sale.

g. Accounting for taxes on income:

Current taxes on income have been provided by the Company in accordance with the relevant provisions of the Income Tax Act, 1961. Deferred Taxes has been recognized on timing differences between accounting income and taxable income subject to consideration of prudence.

h. Employee Benefits:

Short term benefits such as salary, bonus, ex-gratia and other benefits as may be applicable on Company are accounted for on accrual basis. The Company at present does not have any Defined Contribution Plan or Defined Benefit Plan as contemplated under Accounting Standard (AS) 15- Employee Benefits.

i. Borrowing Cost:

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until the month in which such assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the year in which they are incurred.

j. Earnings Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

k. Cash and Cash Equivalents:

In the cash flow statement, cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.

l. Investments:

Investments are classified into long term investments and current investments. Investments that are intended to be held for one year or more are classified as long term investments and investments that are intended to be held for less than one year are classified as current investments.

Long term investments are valued at cost. Provision for diminution in the value of long term investments is made if in the opinion of the management such a decline is other than temporary. Current investments are valued at cost or market value, whichever is lower. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit or loss.

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Mar 31, 2018

1. Summary of significant accounting policies

a. Changes in accounting policy

Accounting policies unless specifically stated to be otherwise are consistent and are in accordance with generally accepted accounting principles.

b. Revenue recognition

Accordingly wherever there is uncertainty in the realization of income, the same is not accounted for till such time the uncertainty is resolved. Income from sale of shares is recognized on the execution of the transaction on the stock exchange. All expenses are accounted for on accrual basis.

c. Property, plant & equipment

Property, plant & equipment are valued at historical cost, as reduced by accumulated thereon depreciation. Cost of property, plant & equipment includes cost of purchase and/or construction and necessary expenditure incurred to make them ready for use in the business.

d. Inventories

Inventories include investments in shares & bonds of other companies held for trading purpose. The company values such inventory made at the lower of cost or net realizable value.

e. Depreciation

Property, plant & equipment are depreciated on a Written down Value method over the estimated useful lives of the assets considering the guidelines of Part C of Schedule II to the Companies Act, 2013.

f. Taxes on income

Current taxes on income have been provided by the Company in accordance with the relevant provisions of the Income Tax Act, 1961. Deferred Taxes has been recognized on timing differences between accounting income and taxable income subject to consideration of prudence.

g. Employee Benefits

Short term benefits such as salary, bonus, ex-gratia and other benefits as may be applicable on Company are accounted for on accrual basis. The Company at present does not have any Defined Contribution Plan or Defined Benefit Plan as contemplated under Accounting Standard (AS) 15- Employee Benefits.

h. Borrowing Cost

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until the month in which such assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the year in which they are incurred.

i. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

j. Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.

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Mar 31, 2015

A. Changes in accounting policy

Accounting policies unless specifically stated to be otherwise are consistent and are in accordance with generally accepted accounting principles.

b. Revenue recognition

Revenue is being recognized in accordance with the guidance note on Accrual basis of accounting issued by the institute of Chartered Accountants of India. Accordingly wherever there is uncertainty in the realization of income, the same is not accounted for till such time the uncertainty is resolved. Income from Sale of Shares is recognized on the execution of the transaction on the stock exchange. All expenses are accounted for on accrual basis.

c. Fixed assets:

Fixed Assets are valued at Historical cost, less Depreciation. Cost of fixed Assets includes cost of purchase and/or construction as increased by necessary expenditure incurred to make them ready for use in the business.

d. Inventories

Inventories include investments in shares & bonds of other companies. The company classifies such investments & bonds as inventory and valuation of them has been made at lower of cost or market value.

e. Depreciation

Fixed assets are depreciated on a Written down Value method over the estimated useful lives of the assets considering the guidelines of Part C of Schedule II to the Companies Act, 2013. Following are useful lives for each asset category:

Assets Category Useful life (in years)

Computers 3

Motor vehicles 8

Furniture and fittings 10

f. Taxes on income

Current taxes on income have been provided by the Company in accordance with the relevant provisions of the Income Tax Act, 1961. Current Tax Include Rs. 73282 Demand Under Scrutiny Assessment & 3065 of Short Provision of A.Y. 2012-13. Deferred Taxes has been recognized on timing differences between accounting income and taxable income subject to consideration of prudence.

g. Employee Benefits

Provision for Gratuity has not been made, as presently no employee is eligible for the same. Provision of provident fund and ESI has not been made, as the Provisions of the same are yet not applicable to the company. The company is not paying leave encashment benefits to its employees as per the rules of the company.

h. Borrowing Cost

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until the month in which such assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the year in which they are incurred.

i. Earning Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

j. Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents includes cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.

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Mar 31, 2014

A. Changes in accounting policy

Accounting policies unless specifically stated to be otherwise are consistent and are in accordance with generally accepted accounting principles.

b. Revenue recognition

Having regard to the size, nature and level of operation of the business, the company is applying accrual basis of accounting for recognition of income earned and expenses incurred in the normal course of business.

c. Fixed assets:

Fixed Assets are valued at cost of purchase and/or construction as increased by necessary expenditure incurred to make them ready for use in the business.

d. Inventories

Inventories include investments in shares & bonds of other companies. The company classifies such investments & bonds as inventory and valuation of them has been made at lower of cost or market value. However, unquoted investments are stated at cost.

e. Depreciation

The company charged depreciation on its fixed assets on WDV method as per rates prescribed under Schedule XIV of the Companies Act, 1956.

f. Taxes on income

Current taxes on income have been provided by the Company in accordance with the relevant provisions of the Income Tax Act, 1961. Current Tax Include Rs. 13140 of Previous Year Income Tax. Deferred Taxes has been recognised on timing differences between accounting income and taxable income subject to consideration of prudence.