NOTE T- SIGNIFICANT ACCOUNTING POLICIES
1. Company over view:
Virtual Galaxy Infotech Limited (Formerly known as Virtual Galaxy Infotech Private Limited) was incorporated
on 12th September 1997. The company operates global organization possessing an experienced and dedi¬
cated team of dynamic professionals,
capable of offering innovative, high-quality software products, solutions & specialized software services, in
the domain of Banking & Finance, ERP, E-Governance, Web Service, Cloud Computing, Data Management &
System Integration.
Basis of Preparation of Financial Statements:
The Financial Statements are prepared on an accrual basis of accounting and in accordance with the Gen¬
erally Accepted Accounting Principles in India. These financial statements have been prepared to comply in
all material aspects with the accounting standards notified under section 133 read with rule 7 of the Compa¬
nies (Accounts) Rules, 2014 and the other relevant provsions of the Company's Act, 2013. All assets and liabili¬
ties have been classified as current or non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Company's Act, 2013 based on the nature of the products and the
time between the acquisition of assets for processing and their realization of cash and cash equivalents.
Accounting policies have been consistently applied except where a newly issued accounting standard is ini¬
tially adopted or a revision to an existing accounting standard requires change in the accounting policy
hitherto in use
Use of Estimates
The preparation of financial statements require estimates and assumptions to be made that affect the re¬
ported balances of assets as on the date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Accounting
estimates could change from period to period. Actual results could differfrom these estimates.
The following significant accounting policies are adopted in preparation of these financial statements - .
A. Property, Plant & Equipment
Tangible assets are shown under gross block are valued at cost of acquisition inclusive of inward freight,
duties, taxes and other incidental expenses related to its acquisition. All such direct costs are capitalized
when the tangible assets are ready to use.
B. Depreciation
Depreciation on all tangible assets is provided on Written down value Method in accordance with Schedule
II of the Companies Act 2013. Management has not charged the depreciation to the Software Development
called V-Pay, since it is developing stage.
C. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impair¬
ment loss is charged to Statement of Profit & Loss in the year in which an asset is identified as impaired. The
impairment loss recognized in prior accounting period is reversed if there has been change in the estimate
of recoverable amount.
D. inventory Valuation
Inventories are valued at lower of cost or net realizable value, whichever is lower. Inventories are valued at
FIFO basis and includes all purchase related expenses.
E Revenue Recognition
a. Sales are recognized when goods are supplied and are recorded net of discounts. Sales values are pre¬
sented net of Goods and Service tax in the statement of profit and loss account.
b. Income from other receipts are recognized on completion and on acceptance by the customers.
c. Interest income is recognized using proportion method, based on rates implicit in the transactions.
F. Income from Investments
Current investments are carried at lower of cost and Quoted/Fair value, computedcategory wise. Long-Term
Investments are stated at cost. Provision for diminution in the value of Long-term Investments is made only
if such a decline is other than temporary.
G. Taxes on Income - Current and Deferred
Income Taxes are accounted for in accordance with Accounting Standard 22 on "Accounting for Taxes on
Income", (AS 22) issued by The Institute of Chartered Accountants of India. Tax expense comprises both cur¬
rent tax and deferred tax. Current tax is measured at the amount expected to be paid or recovered from the
tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognized for future tax
consequence attributable to timing difference between taxable income and accounting income that are
measure at relevant enacted tax rates. At each Balance sheet date the company reassesses unrealized de¬
ferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case
maybe.
H. Employee Benefits
Gratuity and all the other retirement benefits is accounted for on accrual basis. Company's contribution to
provident fund and other fund is charges to Profit and Loss account. PFs are treated as defined contribution
plans. PF Contribution is made to the Regional Provident Fund Commissioner.
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