Note 1: MATERIAL ACCOUNTING POLICIES
A: CORPORATE INFORMATION
The accompanying financial statements comprise the financial statements of HYPERSOFT
Technologies Limited (the Company). The Company is a public Company domiciled in India and
is incorporated under the provisions of the Companies Act applicable in India. The registered
office of the Company is located at Hyderabad, Telangana, India.
B. BASIS OF ACCOUNTING:
The financial statements are prepared and presented in accordance with Generally Accepted
Accounting Principles in India (GAAP), mainly comprising the mandatory Accounting
Standards(IND AS) as notified under section 133 of the Companies Act, 2013 read with the
Companies(Indian Accounting Standards) Rules, 2015 to the extent applicable and the provisions
of the Companies Act, 2013.
Balance Sheet , Statement of Profit and Loss, Cash Flow Statement and Statement of Changes in
Equity are prepared in conformity with Accounting Standards as prescribed under Section 133 of
the Companies Act, 2013 (‘Act’) , the provisions of the Act (to the extent notified) and guide
lines issued by the Securities and Exchange Board of India (SEBI).
Accounting policies have been consistently applied except where a newly issued Accounting
Standard is initially adopted or a revision to an existing Accounting Standard requires a change
in accounting policy hitherto in use.
The company generally follows mercantile system of Accounting and recognizes significant
items of income and expenditure on accrual basis.
C. USE OF ESTIMATES:
The preparation of Financial Statements in conformity with GAAP requires estimates and
assumptions (including revisions if any) that affect the reported amount of assets and liabilities,
disclosure of contingent liability on the date of financial statements and the reported amount of
Revenue and expenses during the reporting period. Differences between the actual results and
estimates are recognized in the period in which the results are known/materialized.
This note provides an overview of the areas that involve a higher degree of judgment or
complexity, and of items which are more likely to be materially adjusted due to estimates and
assumptions turning out to be different than those originally assessed. Detailed information about
each of these estimates and judgments is included in the relevant notes together with information
about the basis of calculation for each affected line item in the financial statements.
Critical Estimates and judgments
The areas involving critical estimates or judgments are:
• Estimation of current tax expense and payable
• Estimation of defined benefit obligation
• Estimation of useful life of Property, Plant and Equipment
• Impairment of trade receivables
D. BASIS OF MEASUREMENT
The financial statements have been prepared on a historical cost basis except for certain assets
and liabilities which have been measured at fair value as per applicable IND AS accounting
standards.
The Financial Statements are presented in Indian Rupees (INR), except when otherwise
indicated, which is the functional currency of the Company.
E. REVENUE RECOGNITION:
The Company derives revenues primarily from business IT services comprising of software
development and related products.
Revenue is recognised upon transfer of control of promised products or services to
customers in an amount that reflects the consideration we expect to receive in exchange for
those products or services.
Interest income is accrued on a time basis, by reference to the principal outstanding and the
applicable effective interest rate.
F. PROPERTY, PLANT & EQUIPMENT:
Property, Plant & Equipment are disclosed at historical cost of acquisition.
G. DEPRECIATION:
During the year, depreciation is provided on the straight line method and based on the useful
life and in the manner specified in schedule II of the Companies Act, 2013.
H. PRIOR PERIOD / PREPAID EXPENSES:
Expenditure less than Rs.10,000/- are not classified into Prior Period Expenditure or Prepaid
Expenses in view of the fact that they are not material in nature.
I. FOREIGN CURRENCY TRANSACTIONS:
Transactions in foreign currencies are accounted at functional currency, at the exchange rate
prevailing on the date of transactions. Gains / losses arising out of the fluctuations in the
exchange rate between functional currency and foreign currency are recognized in the Statement
of Profit & Loss in the period in which they arise.
The fluctuations between foreign currency and functional currency relating to monetary items at
the year ending are accounted as gains / losses in the Statement of Profit & Loss
J) INCOME TAX
Tax expense comprises of current and deferred taxes.
The income tax expense or credit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period. The management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting
profit nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity.
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