Note 21: Significant accounting policies
1. Company Overview:
Gyan Developers & Builders Limited is a public Limited company incorporated and domiciled in India and has its registered office at Gyan kiran, Door No. 6, Hanumantha Rao street, T. Nagar, Chennai- 600 017. The company's shares are listed in BSE Limited. The company is principally engaged in buying and selling of vacant land.
2. Significant Accounting Policies:
This note provides a list of the significant accounting policies adopted in the preparation of the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 ('the Act') and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter.
(b) Revenue recognition Income from Operations:
Income from Operations is determined as the aggregate during the period of the increase in land development cost, Service charges & sale of land. During the year there is no revenue generated from Increase in land development cost and Service charges.
(a) Increase in Land Development Cost
Increase in Land Development cost is the difference between the amount received from Prospective buyer and amount paid to the vendor at initial stage.
(b) Service charges
Service Charges is the nature of income which is generated from making out the deal between the land seller and prospective buyer.
(c) Revenue from Sale of Land
Revenue from Sale of land is the difference between the cost of land purchased (inclusive of stamp duty and other charges) and Sale value of the land.
(c) Current or Non-Current classification
An Asset or liability is classified as current if it satisfies any of the following conditions: Asset or liability is expected to be realized in the company's normal settlement cycle (or) Asset is intended for sale or consumption (or) Asset or liability is held primarily for the purpose of trading (or)asset or liability is expected to be realized or settled within twelve months after reporting period.
(d) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are companyed at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or companys of assets (cash-generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(e) Accounting for Taxes on Income
Current Income Tax expenses comprise taxes on income from operations in India. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax expenses or benefit is recognized on timing differences being the differences between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses, MAT and deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available to realize such assets. In other situations, MAT and deferred tax
assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.
(f) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(g) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
(h) Investments and other financial assets
(i) Classification
The company classifies its financial assets in the following measurement categories:
? those to be measured subsequently at fair value (either through other comprehensive income, orthrough profit or loss), and
? those measured at amortised cost.
The classification depends on the entity's business model for managing the financial assets and thecontractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or othercomprehensive income. For investments in debt instruments, this will depend on the business model inwhich the investment is held. For investments in equity instruments, this will depend on whether the companyhas made an irrevocable election at the time of initial recognition to account for the equity investment atfair value through other comprehensive income.
(ii) Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financialasset not at fair value through profit or loss, transaction costs that are directly attributable to theacquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit orloss are expensed in profit or loss.
Equity instruments
The company subsequently measures all equity investments at fair value. Where the management haselected to present fair value gains and losses on equity investments in other comprehensive income, there isno subsequent reclassification of fair value gains and losses to profit or loss. Dividends from suchinvestments are recognised in profit or loss as other income when the company's right to receive payments isestablished.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equityinvestments measured at FVOCI are not reported separately from other changes in fair value.
Fair value through other comprehensive income (FVOCI): Assets that are held for collectionof contractual cash flows and for selling the financial assets, where the assets' cash flows representsolely payments of principal and interest, are measured at fair value through other comprehensiveincome (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognitionof impairment gains or losses, interest revenue and foreign exchange gains and losses which arerecognised in profit and loss. When the financial asset is derecognised, the cumulative gain or losspreviously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effectiveinterest rate method.
Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCIare measured at fair value through profit or loss. A gain or loss on a debt investment that issubsequently measured at fair value through profit or loss and is not part of a hedging relationship isrecognised in profit or loss and presented net in the statement of profit and loss within othergains/(losses) in the period in which it arises. Interest income from these financial assets is included inother income.
(iii) Impairment of financial assets
The company assesses on a forward looking basis the expected credit losses associated with its assets carried atamortised cost and FVOCI debt instruments. The impairment methodology applied depends on whetherthere has been a significant increase in credit risk.
For trade receivables only, the company applies the simplified approach permitted by Ind AS 109 FinancialInstruments, which requires expected lifetime losses to be recognised from initial recognition of thereceivables.
(i) Property, plant and equipment
Property,plant and equipment:
i) Property, Plant and Equipment are stated at cost of acquisition net of accumulated depreciation/ amortization and impairment losses if any, except free hold land which is carried at cost less impairment losses if any. The cost comprises purchase prices, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
ii) The Company identifies the significant parts of plant and equipment separately which are required to be replaced at intervals. Such parts are depreciated separately based on their specific useful lives. The cost of replacement of significant parts are capitalized and the carrying amount of replaced parts are de-recognized. When each major inception/ overhauling is performed, its cost is recognized in the carrying amount of the item of property, plant and equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of the previous inspection/ overhauling (as distinct from physical parts) is de- recognized.
iii) Other expenses on fixed assets including day to day repair and maintainance expenditure and cost of replacing parts that does not meet the captilization criteria in accordance with Ind AS 16 are charged to the statement of profit and loss for the period during which such expenses are incurred.
iv) Depreciation has been provided on written down value method.
v) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each reporting date and adjusted prospectively, if appropriate.
vi) Upon first time adoption of Ind AS, the company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., 1st April 2016.
(j) Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the
end of financial year which are unpaid. The amounts are unsecured and are usually paid within
30 days of recognition. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(k) Land Owner's Account
Advance to land owners are reflected as the aggregate of amounts paid to them and amounts due from them, reduced by the amounts credited to them if the agreement is cancelled or due to any change in the cost of the land.
(l) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs, asper the requirement of Schedule III, unless otherwise stated.
Note 22: Notes forming part of Financial Statements
1. Disclosure in Relation to Undisclosed Income
During the year, the Company has not surrendered or disclosed any income in the tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act, 1961). Accordingly, there are no transactions which are not recorded in the books of accounts.
2. Disclosure of Transactions with Struck off Companies
The Company has reviewed transactions to the extent of information available for the purpose of identifying transactions with struck off Companies. Based on the above, there are no transaction with Struck off Companies in the current financial year.
3. Disclosure requirements as notified by MCA pursuant to amended Schedule III
Nothing to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
(a) Crypto Currency or Virtual Currency
(b) Benami Property held under Benami Transactions (Prohibition) Act, 1988 (45 of 1988)
(c) Registration of charges or satisfaction with Registrar of Companies
(d) Relating to borrowed funds:
(i) Wilful defaulter
(ii) Utilisation of borrowed funds & share premium
(e) Loans to Related Parties
(f) Investments/advances through intermediaries
(g) Effect of scheme of arrangement
(h) Compliance with number of layers
(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with understanding that intermediary shall
(i) Directly to indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(j) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding
(Whether recorded in writing or otherwise) that the Company shall -
(i) Directly to indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funded party (Ultimate Beneficiaries); or
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
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