MIHIR R MACHHAR F.Y.B.

COM D-24 MITHIBAI COLLEGE

AS-6 is an accounting standard for depreciation. Introduction 1. This Statement deals with depreciation accounting and applies to all depreciable assets, except the following items to which special considerations apply: (i) forests, plantations and similar regenerative natural resources; (ii) wasting assets including expenditure on the exploration for and extraction of minerals, oils, natural gas and similar non-regenerative resources; (iii) expenditure on research and development; (iv) goodwill; (v) live stock. This statement also does not apply to land unless it has a limited useful life for the enterprise. 2. Different accounting policies for depreciation are adopted by different enterprises. Disclosure of accounting policies for depreciation followed by an enterprise is necessary to appreciate the view presented in the financial statements of the enterprise. Definitions 3. The following terms are used in this Statement with the meanings specified: 3.1 Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined. 3.2 Depreciable assets are assets which (i) are expected to be used during more than one accounting period; and (ii) have a limited useful life; and (iii) are held by an enterprise for use in the production or supply of goods and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of business.

AS-9 is an accounting standard for revenue recognition 1. This Statement deals with the bases for recognition of revenue in the statement of profit and loss of an enterprise. The Statement is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from the sale of goods, the rendering of services, and

 the use by others of enterprise resources yielding interest, royalties and dividends. 2. This Statement does not deal with the following aspects of revenue recognition to which special considerations apply: (ii) Revenue arising from hire-purchase, lease agreements; (i) Revenue arising from construction contracts; (iii) Revenue arising from government grants and other similar subsidies; (iv) Revenue of insurance companies arising frominsurance contracts.

IT-ES COMPANIES

WIPRO AS-6 Depreciation and amortization The Company has provided for depreciation using straight line method, at the rates specifed in Schedule XIV to the Companies Act, 1956, excepti on cases of the following assets, which are depreciated based on estimated useful life, which is higher than the rates specifed in Schedule XIV. Fixed assets individually costing Rs. 5,000/- or less are depreciated at 100%. Assets under capital lease are amortised over their estimated useful life or the lease term, whichever is lower. Intangible assets are amortized over their estimated useful life on a straight line basis. For various brands acquired by the Company, estimated useful life has been determined ranging between 20 to 25 years. The Company believesthis based on number of factors including the competitive environment, market share, brand history, product life cycles, operating plan, no restrictions on title and the macroeconomic environment of the countries in which the brands operate. Accordingly, such intangible assets are being amortised over the determined useful life. Payments for leasehold land are amortised over the period of lease. Impairment of assets Financial assets: The Company assesses at each balance sheet date whether there is any objective evidence that a fnancial asset or group of fnancial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss. The amount of loss for short-term receivables is measured as the diference between the assets carrying amount and undiscounted amount of future cash flows. Reduction, if any, is recognised in the Profit and loss account. If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, the recognised impairment loss is reversed, subject to maximum of initial carrying amount of the short-term receivable. Other than fnancial assets:

The Company assesses at each balance sheet date whether there is any indication that a non-fnancial asset including goodwill may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs to is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is refected at the recoverable amount subject to a maximum of depreciated historical cost. In respect of goodwill, the impairment loss will be reversed only when it was caused by specifc external events of an exceptional nature that is not expected to recur and their efects have been reversed by subsequent external events. AS-9: Revenue recognition Services: The Company recognizes revenue when the signifcant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method for recognizing revenues and costs depends on the nature of the services rendered: A. Time and materials contracts Revenues and costs relating to time and materials contracts are recognized as the related services are rendered. CMC

AS-6 Fixed Assets and Depreciation i. All fixed assets are stated at cost less accumulated depreciation. Cost includes purchase price and all other attributable costs of bringing the assets to working condition for intended use. ii. Fixed assets acquired out of grants, the ownership of which rest with the grantor, are capitalised at cost. iii. Capital work-in-progress comprises the cost of fixed assets that are not ready for their intended use at the balance sheet date. iv. Depreciation on all assets of the Parent is charged proportionately from the date of acquisition / installation on straight line basis at rates prescribed in Schedule XIV of the Companies Act, 1956 except in respect of: Leasehold assets that are amortised over the period of lease.

Computers, Plant and Machinery - (other items), that are depreciated over six financial years. Assets costing less than Rs. 5,000 individually have been fully depreciated in the year of purchase. Depreciation on assets of the Subsidiaries is charged based on the estimated useful life of the assets using the straight line method of depreciation. AS-9: Revenue Recognition i. Revenue relating to equipment supplied is recognised on delivery to the customer and acknowledgement thereof, in accordance with the terms of the individual contracts. ii. Revenue from software development on fixed price contracts is recognised according to the milestone achieved as specified in the contract, and is adjusted on the proportionate completion method based on the work completed. iii. On time and material contracts, revenue is recognised based on time spent as per the terms of the specific contracts. iv. Revenue from warranty and annual maintenance contracts is recognised pro rata over the life of the contracts. Maintenance revenue on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt of payment. v. Revenue from Education and Training is recognised on accrual basis over the course term. vi. Dividend income is recognised when the Companys right to receive dividend is established. CEMENT AMBUJA CEMENT AS-6 Depreciation and Amortization : I. Tangible Assets : (i) Premium on leasehold land is amortized over the period of lease. (ii) Depreciation on all assets, other than Vehicles, is provided on the Straight Line Method in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, and on Vehicles on the Written Down Value Method in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Continuous process plants, are identified based on technical assessment and depreciated at the specified rate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is provided on a pro-rata basis from the date of acquisition or installation, and in the case of a new project, from the date of commencement of commercial production. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on

which the said asset is sold, discarded, demolished or scrapped. In respect of an asset for which impairment loss is recognised, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. (iii) Machinery spares which are capitalised are depreciated over the useful life of the related fixed asset. The written down value of such spares is charged to the Profit and Loss Account, on issue for consumption. (iv) The cost of fixed assets, constructed by the Company, but ownership of which belongs to Government/Local Authorities, is amortized at the rate of depreciation specified in Schedule XIV to the Companies Act, 1956. (v) Expenditure on Power Lines, ownership of which belongs to the State Electricity Boards, is amortized over the period as permitted in the Electricity Supply Act, 1948. (vi) Expenditure on Marine Structures, ownership of which belongs to the Maritime Boards, is amortized over the period of agreement. AS-9: Revenue recognition :

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured (ii) Benefit on account of entitlement to import goods free of duty under the Duty Entitlement Pass Book under Duty Exemption Scheme is recognised in the year of export. (iii) Sales include the amount of Sales Tax / VAT remission entitlement due in accordance with the respective incentive schemes. (iv) Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when right to receive the payment is established by the Balance Sheet date. ULRATECH AS-6 Depreciation is charged in the Accounts on the following basis: (A) Tangible Assets: (i) Depreciation is provided on the straight-line basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 except for the following: (a) Company Vehicles other than those provided to the employees at 20% per annum. (b) Motor Cars given to the employees as per the Company s Scheme are depreciated over the Scheme period. (c) Roads, Culverts, Walls, Buildings etc., within factory premises at 3.34 % per annum. (d) Computer and Office Equipments at 25% per annum. (e) Furnitures and Fixtures at 14.29% per annum. (f) Mobile Phones at 33.33% per annum. (ii) Assets acquired upto September 30, 1987, are depreciated at the rates prevailing at

the time of acquisition. (iii) The value of leasehold land and mining lease is amortised over the period of the lease. (iv) Assets not owned by the Company are amortised over a period of five years or the period specified in the agreement. (v) Expenditure incurred on Jetty is amortised over the period of the relevant agreement such that the cumulative amortisation is not less than the cumulative rebate availed by the Company. (vi) Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of project from the date of commencement of commercial production, while depreciation on deductions / disposals is provided on a pro-rata basis upto the month preceding the month of deductions / disposals. (B) Intangible Assets: Specialise softwares are amortised over a period of 3 years. 1. Impairment of Assets: The carrying amounts of assets are reviewed at each balance sheet date, if there is an indication of impairment based on the internal and external factors. An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss, if any, is charged to the Profit and Loss Account in the year in which the asset is identified as impaired. Reversal of impairment loss recognised in prior years is recorded when there is an indication that impairment loss recognised for the asset no longer exists or has been decreased. AS-9 Revenue Recognition: (i) Sales Revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales are net of Sales Tax, VAT, trade discounts, rebates and returns but includes excise duty. (ii) Income from services is recognised as they are rendered, based on agreement/arrangement with the concerned parties. (iii) Dividend income on investments is accounted for when the right to receive the payment is established. Interest income is recognised on accrual basis. (iv) Export Incentives, insurance, railway and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis. 1 6. Mines Restoration Expenditure: The Company provides for the estimated expenditure required to restore quarries and mines. The total estimate of restoration expenses is apportioned over the estimate of mineral reserves and a provision is made based on minerals extracted during the year.