Goel Construction Company Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

2 SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of Preparation of Financial Statements

The financial statements are prepared under the historical
cost convention on accrual basis to comply in all material
aspects and in accordance with Indian Generally Accepted
Accounting Principles (GAAP), which comprises of
mandatory accounting standards as prescribed under
Section 133 of the Companies Act, 2013 read with Rule 7
of the Companies (Accounts) Rules, 2014, the provisions
of the Act (to the extent notified). The accounting policies
have been consistently applied by the Company unless
otherwise stated.

2.2 Use of Estimates

The preparation of financial statements in conformity
with Indian GAAP requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities as at the balance
sheet date and the reported amounts of revenues
and expenses during the reporting period.
Estimates and underlying assumptions are reviewed on an
ongoing basis and are based on management''s evaluation
of relevant facts and circumstances as of the date of the
financial statements. Examples include estimates of useful
lives of fixed assets, provision for doubtful debts and
advances, and employee benefit obligations. In accordance
with Accounting Standard (AS) 5, revisions to accounting
estimates are recognised prospectively in the Statement of
Profit and Loss in the period in which the estimate is revised
and in any future periods affected.

2.3 Revenue Recognition

(a) Construction Contract Revenue : As per Accounting
Standard - 7 issued by "The Institute of the Chartered
Accountant of India", the company is following
"percentage of completion method" as stipulated.
Revenue of the Company from the execution of Fixed
Price Contract is recognized based on percentage of
completion of the contract activity at the reporting
date. Profit is recognized and taken as the revenue
of the company only when the work on the contract
has progressed to a reasonable extent. When the
outcome of a construction contract cannot be
estimated reliably, revenue is recognised only to
the extent of contract costs incurred that are likely
to be recoverable.Expected losses on contracts are
recognised immediately in the Statement of Profit and
Loss.

(b) Revenue (other than sale): Revenue (other than sale)
is recognised as and when the right to receive such
income arises and it is probable that the economic
benefits will flow to the company and the revenue can
be reliably measured.

(c) I nterest Income is recognized on a time proportion
basis taking into account the amount outstanding and
the rate applicable. Interest income is recognised only
when there is no significant uncertainty regarding its
measurement or collectability

2.4 Recognition of Expenditure

Expenses are accounted for on the accrual basis and are
recognised in the Statement of Profit and Loss in the
period to which they relate. Provision is made for all known
liabilities and anticipated losses, based on management''s
best estimates, in accordance with applicable Accounting
Standards.

2.5 Property Plant and Equipment

Property, Plant and Equipment (PPE) comprise tangible
assets held for use in the execution of construction
contracts, for rental, or for administrative purposes. These
include construction equipment, furniture & fixtures,
computer & printers, vehicles, office equipment, land,
buildings and other assets. PPE are stated at cost less
accumulated depreciation and accumulated impairment
losses, if any. Freehold land is carried at cost and is not
depreciated. The cost of an item of PPE comprises its
purchase price (net of trade discounts and rebates), non¬
refundable duties and taxes, freight and installation
expenses, borrowing costs directly attributable to
qualifying assets, and any other directly attributable costs
incurred to bring the asset to its working condition for its
intended use. Expenditure incurred on major inspection,
overhauling and replacement of significant components of
construction equipment is capitalised where it is probable
that future economic benefits will flow to the Company and
the cost can be measured reliably. The carrying amount of
the replaced parts is derecognised.

2.6 Intangible Assets and amortization

Intangible assets are stated at cost less accumulated
amortisation and accumulated impairment losses, if any.
Intangible assets are amortised on a straight-line basis over
their estimated useful life of five years, unless a different
useful life is assessed based on technical, contractual or
other relevant factors. The useful life and amortisation
method are reviewed at each financial year-end.

2.7 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance
Sheet date if there is any indication of impairment based
on internal/ external factors. An asset is impaired when
the carrying amount of the asset exceeds the recoverable
amount. An impairment loss is charged to the Statement
of Profit and Loss in the year in which an asset is identified
as impaired. An impairment loss recognised in prior
accounting periods is reversed if there has been a change
in the estimates used to determine the asset''s recoverable
amount. The reversal is recognised in the Statement of
Profit and Loss to the extent that the carrying amount of
the asset does not exceed the carrying amount that would
have been determined (net of depreciation or amortisation)
had no impairment loss been recognised in prior years.

2.8 Capital Work-in-Progress

Assets under installation or construction are disclosed
as Capital Work-in-Progress until the asset is ready for its
intended use at the reporting date.

2.9 Depreciation

Depreciation on Property, Plant and Equipment (other than
freehold land and capital work-in-progress) is provided
on the Straight-Line Method (SLM) over the estimated
useful lives of the respective assets. The estimated useful
lives of assets are determined based on internal technical
assessment carried out by the management and supported,
where necessary, by external technical advice. The
management believes that the useful lives adopted, though
in certain cases different from those prescribed under Part
C of Schedule II to the Companies Act, 2013, best represent
the period over which the assets are expected to be used.
The residual value of Property, Plant and Equipment is
considered at 5% of the original cost of the asset.

*In respect of these assets, the management estimate of
useful lives, based on technical assessment is different than
the useful lives prescribed under Part C of Schedule II to the
Companies Act, 2013. However, based on internal technical
evaluation and external advice received, the management
believes that the useful lives as considered for arriving at
the depreciation rates, best represent the period over which
management expect to use these assets.

Depreciation of an asset begins when it is available for use,
i.e., when it is in the location and condition necessary for
it to be capable of operating in the manner intended by
management. Depreciation of an asset ceases at the earlier
of the date that the asset is retired from active use and is held
for disposal and the date that the asset is derecognised.

The depreciation method, useful lives and residual values
are reviewed periodically, including at each financial year-
end. Any revision is treated as a change in accounting
estimate and applied prospectively.

2.10 Investments

Investments are classified as Current Investments or
Long-term Investments at the time of acquisition.
Current investments are investments that are readily
realisable and are intended to be held for not more than
one year from the date of acquisition. Current investments
are carried at the lower of cost and quoted/ fair value.
The comparison of cost and fair value is made on an
individual investment basis or by category of investment,
as appropriate. Long-term investments are stated at
cost. Provision for diminution in the value of long¬
term investments is made only when such diminution

is considered to be other than temporary in nature.
On disposal of an investment, the difference between
the carrying amount and the net disposal proceeds is
recognised in the Statement of Profit and Loss.

2.11 Inventories

(a) Raw Material, store and spares, tools and implements,
materials in hand are valued at cost.

(b) Shuttering material are valued at Cost or NRV
(whichever is less).

(c) The value of contracts, irrespective of whether the
progress of work is below or at the reasonable extent
is valued at estimated cost consisting of the costs that
relate directly and that which can be allocated to the
specific contract.

2.12 Cash and Cash Equivalents

Cash and cash equivalents for the purpose of the Cash Flow
Statement comprise cash on hand, balances with banks,
and short-term investments with an original maturity of
three months or less from the date of acquisition, which
are readily convertible into known amounts of cash and
are subject to insignificant risk of changes in value.

2.13 Advances from Customers and Progress
payments

(a) Advances received from customers in respect of
construction contracts are recognised as liabilities
until the related work is performed and revenue
is recognised in accordance with the Company''s
revenue recognition policy.

(b) Progress payments received are adjusted against
amounts receivable from customers in respect of the
contract of work performed.

2.14 Borrowing Cost

Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying
asset, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale,
are included in the cost of those assets. Such borrowing
costs are capitalised as part of the cost of the asset when it
is probable that they will result in future economic benefits
to the entity and the costs can be measured reliably. Other
borrowing costs are recognised as an expense in the
period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of
a qualifying asset commences when expenditure for the
asset is being incurred, borrowing costs are being incurred

and activities that are necessary to prepare the asset for its
intended use or sale are in progress.

Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare
the qualifying asset, if any, for its intended use or sale are
interrupted or completed.

Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalisation.

2.15 Employee Benefits

(a) Short Term Employee Benefits:

Employee benefits such as salaries, wages, short term
compensated absences, expected cost of bonus and
performance-linked rewards falling due wholly within
twelve months of rendering the service are classified
as short- term employee benefits and are expensed in
the period in which the employee renders the related
service.

(b) Gratuity & other long term benefits

The company has an obligation toward gratuity, a
defined 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. Vesting occurs upon completion of five
years of service. The company accounts for the liability
for gratuity benefits payable in future based on an
independent actuarial valuation conducted by an
independent actuary using the Projected Unit Credit
Method as at the Balance Sheet date. Actuarial gains
are recognized as and when incurred. The company
does not have any fund for payment of gratuity.

1 Background of the Company:

Goel Construction Company Private Limited (“the company”) is primarily engaged in the business of Civil Construction work. The company is mainly executing Industrial buildings work. The Company''s registered office is at 230, City Centre, S.C. Road, Jaipur, Rajasthan, India, 302001

2 Significant accounting policies

2.1 Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with Indian Generally Accepted Accounting Principles (GAAP), which comprises of mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified). The accounting policies have been consistently applied by the Company unless otherwise

2.2 Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The estimates and assumptions used in the accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. The examples of such estimates include, the useful life of tangible and intangible fixed assets, allowances for doubtful debts / advances, future obligations in respect of retirement benefit plans etc. Actual results may differ from the estimates and assumptions and in such case, the difference is recoanised in the period in which the results are known.

2.3 Revenue Recognition

Construction Contract Sales : As per Accounting Standard - 7 issued by “The Institute of the Chartered Accountant of India”, the company is following “percentage of completion method” as stipulated. Revenue of the Company from the execution of Fixed Price Contract is recognized based on percentage of completion. Profit is recognized and taken as the revenue of the company only when the work on the contract has progressed to a reasonable extent.

2.4 Recognition of Expenditure

Expenses are accounted for on an accrual basis and provision is made for all known losses and liabilities.

2.5 Property Plant and Equipments

Property, Plant and Equipment (PPE) are tangible items that are stated at cost less accumulated depreciation and accumulated impairment losses except for freehold land, which is not depreciated. Cost includes purchase price (after deducting trade discount/ rebate), non-refundable duties and taxes, cost of replacing the component parts, borrowing cost and other directly attributable cost to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the management.

2.6 Intangible Assets and amortization

Intangible assets are stated at cost less accumulated amortization. Intangible assets are amortized on a straight line basis over their estimated useful life of 5 years. Currently company does not have any intangible asset.

2.7 Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting Deriods is reversed if there has been chanae in the estimate of the recoverable amount.

2.8 Capital Work-in-Progress

Capital work-in-progress comprises cost of fixed assets that are not yet ready for their intended use at the balance sheet date.

2.9 Depreciation

Depreciation on Fixed Assets is provided to the extent ot depreciable amount on the basis of Straight-Line Method (SLM). Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013

2.10 Investments

Current investments that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made, are carried at lower of cost and quoted / fair value, computed category wise. Long Term Investments are stated at cost. However, provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

2.11 Inventories

(a) Raw Material, store and spares, tools and implements, materials in hand are valued at cost.

(b) Shuttering material are valued at NRV.

(c) The value of contracts, irrespective of whether the progress of work is below or at the reasonable extent is valued at estimated cost consisting of the costs that relate directly and that which can be allocated to the specific contract.

2.12 Foreign Currency Transactions

(a) Transactions denominated in foreign currencies are normally recorded on the initial recognition in the reported currency using the exchange rates prevailing on the date of transaction.

(b) Monetary assets & liabilities denominated in foreign currencies are restated at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted in the period in which they arise.

(c) Any income or expense on account of exchange difference either on settlement or on translation of monetary items are recognized in the Statement of Profit and Loss for the period in which they arise.

2.13 Earning Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equities shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

2.14 Borrowing Cost

Interest and other borrowing costs attributable to qualifying assets are capitalized. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over 12 months) to get ready for its intended use or sale. Other interest and borrowing costs are charged to statement of Profit & Loss.

2.15 Employee Benefits

(a) Short Term Employee Benefits:

Employee benefits such as salaries, wages, short term compensated absences, expected cost of bonus and performance-linked rewards falling due wholly within twelve months of rendering the service are classified as short- term employee benefits and are expensed in the period in which the employee renders the related service.

(b) Gratuity & other long term benefits

The company has an obligation toward gratuity, a defined 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. Vesting occurs upon completion of five years of service. The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation conducted by an independent actuary using the Projected Unit Credit Method as at the Balance Sheet date. Actuarial gains are recognized as and when incurred. The company does not have any fund for payment of gratuity.

(c) Termination benefits

Termination benefits are recognised as an expense in the period in which they are incurred.

2.16 Leases

A lease is classified at the inception date as finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. The Company as a lessee:

(i) Operating lease: Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease.

(ii) Finance leases: Finance leases are capitalised at the commencement of lease, at the lower of the fair value of the property or the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income over the period of the lease.

2.17 Provisions, Contingent Liabilities, Contingent Assets and commitments

(a) Provisions:

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

(b) Contingent Liabilities:

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

(c) Contingent Assets:

Contingent Assets are neither recognised nor disclosed in the financial statements

2.18 Accounting for Taxes on Income

(a) Current tax

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961

(b) Deferred Tax

Deferred tax assets and liabilities are recognised by computing the tax effect on timing differences which arise during the year and reverse in the subsequent periods. Deferred tax assets against unabsorbed depreciation and carried forward loss under tax laws, are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets on other timing differences are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(c) Current and Deferred tax is measured based on the provisions of tax laws and tax rates enacted or substantively enacted as at the Balance Sheet date.

2.19 Advances from Customers and Progress payments:

(a) Advances received from customers in respect of contracts are treated as Loans (Liabilities) as the case

(b) Progress payments received are adjusted against amounts receivable from customers in respect of the contract of work performed.

2.20 Government Grants

Government grants are recognised at fair value when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received. Grants related to purchase of assets are deducted from the cost of Assets while grants related to expenses are deducted from related expense or treated as other income in the income statement.

2.21 Cash and Cash Equivalents

Cash and cash equivalent for the purpose of the cash flow statement comprises of cash at bank and in hand and short term investment with original maturity of three month or less