Divine Hira Jewellers Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2. Summary of significant accounting
policies

a. Basis of preparation of financial statement

The financial statements are prepared and presented
under the historical cost convention, on the accrual
basis of accounting, and in accordance with the
applicable provisions of the Companies Act, 2013 (the
‘Act'') and the accounting principles generally accepted
in India (‘Indian GAAP'') and comply with the Accounting
Standards (‘AS'') as specified under section 133 of the
Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014 (as amended).

b. Use of estimates

The preparation of financial statements in accordance
with generally accepted accounting principles (‘GAAP'')
in India requires that management makes estimates
and assumptions that affect the reported amount
of assets and liabilities and disclosure of contingent
liabilities (if any) as of the date of the financial
statements and the reported income and expenses
during the year. Management believes that the
estimates and assumptions used in the preparation of
the financial statements are prudent and reasonable
and based on management''s evaluation of the facts
and circumstances as of the date of the financial
statements. Actual results could differ from these
estimates. Any revision to accounting estimates is
recognised prospectively in current and future periods.

c. Revenue recognition

The company recognised revenue once the risk and
reward has been transferred to the buyer and there is
certainty of ultimate collection.

Interest and other income

Interest income is recognised on a time proportion
basis taking into account the amount outstanding and
the applicable rate.

d. Property, plant and equipment and
depreciation

Property, plant and equipments are stated at cost
of acquisition less accumulated depreciation and
impairment losses, if any. Cost comprises of the
purchase price and any other attributable cost of
bringing the assets to its working condition for its
intended use.

Subsequent expenditure related to an item of tangible
asset are added to its book value only if they increase
the future benefits from the existing asset beyond its
previously assessed standard of performance.

Losses arising from the retirement of, and gains or
losses arising from disposal of Property plant and
equipment which are carried at cost are recognised in
the statement of profit and loss.

The Company provides pro-rata depreciation
on additions and disposals made during the year.
Depreciation on fixed assets is provided under the
straight line method over the useful lives of assets as
prescribed under Part C of Schedule II of the Act.

e. Impairment of assets

In accordance with Accounting Standard 28 on
“Impairment of Assets?ets” the carrying amounts of the
Company''s assets are reviewed at each balance sheet
date to determine whether there is any impairment.
The recoverable amount of the assets (or where
applicable, that of the cash generating unit to which
the asset belongs) is estimated as the higher of its net
selling price and its value in use. An impairment loss is
recognised whenever the carrying amount of an asset
or a cash-generating unit exceeds its recoverable
amount. Impairment loss is recognised in the statement
of profit and loss or against revaluation surplus
where applicable.

f. Employee benefits
Short-term employment benefits

Short-term employee benefits are recognised as an
expense at the undiscounted amount in the statement
of profit and loss for the year in which the related
services are rendered.

g. Operating leases

Leased assets under which all the risks and rewards
of ownership are effectively retained by the lessor
are classified as operating leases. Payments under
operating leases are recognised as expense in the
statement of profit and loss based on the contractual
terms of the lease arrangements.

h. Taxation
Current tax

Provision for current tax is recognized based on the
estimated tax liability computed after taking credit
for allowance and exceptions in accordance with the
Income tax Act, 1961.

Deferred tax

Deferred tax assets and liabilities are recognised for
the future tax consequences attributable to timing
differences between the financial statements carrying
amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities
are measured using the enacted tax rates or tax rates
that are substantively enacted at the balance sheet
dates. The effect on deferred tax assets and liabilities
of a change in tax rates is recognised in the period that
includes the enactment date. Where there is unabsorbed
depreciation or carry forward losses, deferred tax
assets are recognised only if there is virtual certainty
supported by convincing evidence of realisation of such
assets. Other deferred tax assets are recognised only
to the extent there is reasonable certainty of realisation
in the future. Such assets are reviewed at each balance
sheet date to reassess realisation.

1.    Background

Divine Hira Jewellers Limited (the "Company") was incorporated in 2022 under the Companies Act, 2013 and the Company is engaged in the trades or business of manufacturing, making, buying and selling in ornaments, articles, bar, coins and jewellers of all kinds in Gold and Silver.

2.    Summary of significant accounting policies

a.    Basis of preparation of financial statement

The financial statements are prepared and presented unoer the historical cost convention, on the accrual basis of accounting, and in accordance with the applicable provisions of the Companies Act. 2013 (the ‘Act') and the accounting principles generally accepted in India (‘Indian GAAP’) and comply with the Accounting Standards (‘AS’) as specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules. 2014 (as amended).

The Company is a Small and Medium Sized Company (SMC) as defined in the General Instructions in respect of Accounting Standards as specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). Accordingly, the Company has complied with Accounting Standards as applicable to a Small and Medium Sized Company.

b.    Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles (‘GAAP’) in India requires that management makes estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities (if any) as of the date of the financial statements and the reported income and expenses during the year. Management believes that the estimates and assumptions used in the preparation of the financial statements are prudent and reasonable and based on management's evaluation of the facts and circumstances as of the date of the financial statements. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

c.    Revenue recognition

The company recognised revenue once the risk and reward has been transferred to the buyer and there is certainty of ultimate collection.

Interest and other income

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate.

d.    Property, plant and equipment and depreciation

Property, plant and equipment's are stated at cost of acquisition less accumulated depreciation and impairment losses, if any. Cost comprises of the purchase p^rice and any other attributable cost of bringing the assets to its working condition for its intended use.

Subsequent expenditure related to an item of tangiole asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Losses arising from the retirement of, and gains or losses arising from disposal of Property plant and equipment which are carried at cost are recognised in the statement of profit and loss.

The Company provides pro-rata depreciation on additions and disposals made during the year. Depreciation on fixed assets is provided under the straight line method over the usefu; lives of assets as prescribed under Part C of Schedule II of the Act.

e.    Impairment of assets

In accordance with Accounting Standard 28 on "Impairment of Assets" the carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there Is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) Is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds Its recoverable amount. Impairment loss Is recognised in the statement of profit and loss or against revaluation surplus where applicable.

f.    Employee benefits Short-term employment benefits

Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year In which the related services are rendered.

Post-employment benefits

Defined benefit plan

The Company has an obligation towards gratuity, a defired benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees, at retirement, death while In employment or on termination of employment, of an amount equivalent to 15 days salary payable for each completed year of continuous service or part thereof in excess of six months on the basis of last drawn eligible salary. Vesting occurs upon completion of five years of service. The Company accounts for gratuity benefits payable in future, based on an independent actuaria; valuation carried out as at the year end. Actuarial gain/loss is recognised in the statement of profit and loss.

g.    Operating leases

Leased assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Payments under operating leases are recognised as expense in the statement of profit and loss based on the contractual terms of the lease arrangements.

h.    Taxation Current tax

Provision for current tax is recognized based on the estimated tax liability computed after taking credit for allowance and exceptions in accordance with the Income tax Act, 1961.

Deferred tax

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the balance sheet dates. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in the future. Such assets are reviewed at each balance sheet date to reassess realisation.

i.    Provisions and contingencies

Provisions comprise liabilities of uncertain tinning or amount such as loss contingencies arising from claims, litigation, assessment, fines, penalties, etc. Provisions are recognised when the Company has a present obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can bereasonably estimated.

A disclosure for a contingent liability is mode when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is mode.

j.    Cash and cash equivalents

In the cash flow statement, cash and cash equivalents include cash in hand, cheques in hand, demand deposits with banks, other short-term highly liquid investments witn original maturities of three months or less.

k.    Borrowing cost

Borrowing costs incurred on constructing or on accuiring a qualifying asset are capitalised as cost of that, asset until it is ready for its intended use or sale. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue and recognised as an expense in the statement of profit and loss.

l.    Inventory

Inventories of goods and pocking material arc valued at cost or net realisable value, whichever is lower. Cost of inventories comprises of all cost of purchases, cost of conversion and other costs incurred in bringing the inventories to their present condition and location.

m.    Earnings Par Share

Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earrings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that cou d have been issued upon conversion of all dilutive potential equity shares.

n.    Foreign Currency Transactions

Foreign currency transactions are recoroed at the exchange rates prevailing on the date of such transactions. Monetary assets and liabilities as at the balance sheet date are translated at the rates of exchange prevailing at the date of the balance sheet. Gains and losses arising on account of differences in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary foreign currency items are carried at cost.