Note 2: Significant Accounting Policies:
The significant accounting policies followed by the company are stated as below:
i. Basis of preparation of financial statements
The Company is a Small and Medium Sized Company as defined in the General
Instructions in respect of Accounting Standards specified under Section 133 of the
Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
Accordingly, the Company has complied with the Accounting Standards as applicable to a
Small and Medium Sized Company."
Pursuant to the provisions of section 2(40) of the Companies Act, 2013, the Company has
presented a cash flow statement.
Accounting policies not specifically referred to otherwise are in consonance with
generally accepted accounting principles followed by the Company.
ii. Use of estimates
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires estimates and assumptions to be made that affect the
reported amounts of assets and liabilities and disclosure of contingent liabilities on the
date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates and
differences between actual results and estimates are recognised in the periods in which
the results are known / materialise.
iii. Property, Plant and Equipments and Depreciation
Fixed assets are stated at Cost less Depreciation. Cost comprises of Purchase price and any
attributable cost of bringing the assets to working condition for its intended use.
Depreciation on all assets is charged proportionately from the date of acquisition /
installation on written down value basis at rates prescribed in Schedule III of the
Companies Act, 2013.
iv. Impairment of Assets:-
An asset is considered as impaired in accordance with Accounting Standard 28 on
Impairment of Assets when at the balance sheet date there are indications of impairment
and the carrying amount of the asset, or where applicable the cash generating unit to
which the asset belongs, exceeds its recoverable amount (i.e. the highe r of the asset’s net
selling price and value in use). The carrying amount is reduced to the recoverable
amount and the reduction is recognized as an impairment loss in the Statement of Profit
and Loss.
v. Investments
Investments are Long-term, unless stated otherwise and are stated at cost except where
there is diminution in value other than temporary, in which case a provision is made to
the carrying value to recognize the diminution.
vi. Revenue recognition:
Sale of Licenses and Hardware Components:
Sales of Licenses and Hardware Components are recognized, net of returns and trade
discounts on transfer of significant risks and rewards of ownership to the
customer.
Income from Support Services:
Revenue from support service is recognized pro-rata over the period of contract.
Unbilled Revenue:
Revenue recognized over and above the billings on a customer is classified as unbilled
revenue. Unbilled Revenue is classified as unbilled revenue (only act of invoicing is
pending) when there is unconditional right to receive cash, and only passage of time it
required, as per contractual terms. Unearned revenue is recognised when there is billing
in excess of revenue. The billing schedules agreed with customers include periodic
performance based payments.
vii. Inventories
Inventories are valued at the lower of Cost (Generally determined on FIFO Basis) and
Net Realizable Value. Cost includes all charges in bringing the goods to the point of sale,
including octroi and other levies, transit insurance and receiving charges.
viii. Employee Benefits
Company’s contribution to recognized provident fund is defined contribution plan and is
charged to the Profit and Loss Account on accrual basis. There are no other obligations
than the contribution payable to the fund.
Contribution to gratuity fund is defined benefit obligation and is provided for on basis of
an actuarial valuation on projected accrued benefit method made at the end of each
financial year.
ix. Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rate prevailing on the date
of transaction. Foreign Currency denominated assets and liabilities at the balance sheet
date is translated at the exchange rate prevailing on the date of balance sheet.
x. Earnings Per Share
Basic earning per share is computed by dividing the net profit after tax attributable to
equity shareholders for the year by the weighted average number of equity shares
outstanding during the year. Diluted earning per share is computed by dividing the net
profit after tax attributable to equity shareholders for the year by the weighted average
number of equity shares outstanding during the year as adjusted for the effects of all
dilutive potential equity shares, if any.
xi. Accounting For Taxes on Income
Tax expense comprises of current and deferred tax. Provision for current tax is made,
based on the tax payable under the Income-tax Act, 1961. Deferred tax assets and
liabilities from timing differences between taxable income and accounting income is
accounted for using the tax rates and the tax laws enacted or substantially enacted as on
the balance sheet date.
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