Page 189 - FBL AR 2019-20

CORPORATE STATUTORY FINANCIAL
OVERVIEW STATEMENTS STATEMENTS

Notes to the Consolidated financial statements for the year ended March 31, 2020

Rental income from investment property
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same basis as rental income.
Rendering of services:
Revenue from services rendered is recognised pro-rata over the period of the contract as the underlying services are performed.
Infrastructure support services, consists of maintenance of common area in the investment property and supply of essentials. Revenue
from such services are recognised in accordance with the terms of the agreement entered into with individual lessees.

Interest and dividend:
Interest income from financial assets is recognised when it is probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and
the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial assets to that asset’s net carrying amount on initial recognition.
Interest on income tax refund is recognised on receipt of refund order.

Dividend income is recognized when the Group’s right to receive payment is established which is generally when shareholders approve
the dividend.
Export Incentives:
Duty free imports of raw materials under Advance License for imports as per the Import and Export Policy are matched with the exports
made against the said licenses and net benefit / obligation is accounted by making suitable adjustments in raw material consumption.

The benefit under the Duty Drawback, Mercantile Export Incentive Scheme and other schemes as per the Import and Export policy
in respect of exports made under the said schemes is included as ‘Export Incentives’ under the head “Other Operating Revenue” in the
consolidated statement of profit and loss and is accounted in the year of export.
(l) Property, plant and equipment (PPE)
The Group had applied for one time transition exemption of considering the carrying value on the transition date i.e. April 01, 2016 as
the deemed cost under Ind AS for its property, plant and equipment.

Measurement at recognition:
Items of property, plant and equipment are stated in balance sheet at cost less accumulated depreciation and accumulated impairment
losses, if any. Freehold land is not depreciated. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in
accordance with the Group’s accounting policy.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised
impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s
accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and
ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready
for their intended use. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of property, plant and equipment and is recognised
in profit or loss.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and capital work-in-progress) less their residual
values on straight-line method over their useful lives as indicated in Part C of Schedule II of the Companies Act, 2013. Depreciation
methods, useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.

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