II Significant Accounting Policies
1 Basis of preparation:
The Financial Statements have been prepared in accordance with Indian Generally Accepted Accounting Principles
(IGAAP) under historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards
prescribed by the Companies (Accounting Standards) Rules, 2021.
2 Revenue recognition:
a) Sale of services:
The company derives its revenues primarily from Sale of Visual Effects (VFX) services. The revenue from VFX
services are recognised on Percentage of completion basis. Sales are shown net of sales returns, if any.
b) Other Income
Revenue arising from the use by others of enterprise resources yielding interest, royalties and dividends
should only be recognised when no significant uncertainty as to measurability or collectability exists. These
revenues are recognised on the following bases:
(i) Interest : on a time proportion basis taking into account the amount outstanding and the rate applicable.
(ii) Royalties : on an accrual basis in accordance with the terms of the relevant agreement.
(iii) Dividends from : when the owner's right to receive payment is established by investments in shares.
3 Property Plant and Equipment including Intangible assets:
Property Plant and Equipment's are stated at cost, less accumulated depreciation. Cost includes cost of acquisition
including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to
the installation stage, related to such acquisition. Property Plant and Equipment's purchased in India in foreign
currency are recorded in Rupees, converted at the exchange rate prevailed on the date of purchase. Intangible
assets that are acquired by the Company are measured initially at cost. After initial recognition, an intangible asset
is carried at its cost less any accumulated amortisation and any accumulated impairment loss.
4 Depreciation & Amortisation:
The Company has applied the estimated useful lives as specified in Schedule II of the Companies Act 2013 and
calculated the depreciation as per the Written Down Value (WDV) method. Depreciation on new assets acquired
during the year is provided at the rates applicable from the date of acquisition to the end of the financial year. In
respect of the assets sold during the year, depreciation is provided from the beginning of the year till the date of
its disposal.
Intangible assets are amortised on a straight-line basis over the estimated useful life as specified in Schedule
II of the Companies Act 2013. The amortisation expense on intangible assets with finite lives is recognised in
the statement of profit and loss. In respect of the assets sold during the year, amortisation is provided from the
beginning of the year till the date of its disposal.
5 Impairment of assets:
The Management periodically assesses using, external and internal sources, whether there is an indication that
an asset may be impaired. An impairment loss is recognised wherever the carrying value of an asset exceeds its
recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use, which
means the present value of future cash flows expected to arise from the continuing use of the asset and its
eventual disposal. Reversal of impairment loss is recognised immediately as income in the profit and loss account.
6 Use of estimates:
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires
the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and
disclosures relating to contingent assets and liabilities as at the date of the financial statements and the reported
amounts of income and expenses during the year. Examples of such estimates include provisions for doubtful
debts, income taxes, post - sales customer support and the useful lives of Property Plant and Equipment's and
intangible assets.
7 Foreign currency transactions:
Domestic Operation:
I . Initial recognition :
A foreign currency transaction should be recorded, on initial recognition in the reporting currency, by applying
to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at
the date of the transaction.
II . Measurement :
Foreign currency monetary items should be reported using the closing rate.
Non-monetary items which are carried in terms of historical cost denominated in a foreign currency should
be reported using the exchange rate at the date of the transaction
Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency
should be reported using the exchange rates that existed when the values were determined.
III . Treatment of Foreign exchange :
Exchange differences arising on settlement/restatement of foreign currency monetary assets and liabilities of
the Company are recognised as income or expenses in the Statement of Profit and Loss.
8 Employee Benefits:
A. Short - term employee benefits:
Leave encashment:
The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every
year and accounted at actual.
B. Post-Employment benefits:
Defined benefit plan:
Gratuity liability is a defined benefit obligation and is unfunded. The Company accounts for liability for future
gratuity benefits based on the actuarial valuation using Projected Unit Credit Method carried out as at the end
of each financial year.
Defined contribution Plan:
Provident Fund: Eligible employees receive benefit from provident fund covered under the Provident Fund Act.
Both the employee and the company make monthly contributions. The employer contribution is charged off to
Profit & Loss Account as an expense.
9 Taxes on Income:
I ncome Tax expense is accounted for in accordance with AS-22 “Accounting for Taxes on Income” for both
Current Tax and Deferred Tax stated below:
A. Current Tax:
Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961.
B. Deferred Tax:
Deferred tax is recognised, subject to the consideration of prudence, as the tax effect of timing difference
between the taxable income and accounting income computed for the current accounting year using the
tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty, except
arising from unabsorbed depreciation and carried forward losses, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
10 Research & Development:
Expenditure of intangible asset on the research phase are recognised as an expense when it is incurred and
expenditure on development phase are recognised if it is probable that the future economic benefits that are
attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.
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