Page 166 - BCML AR 2019-20

FINANCIAL STATEMENTS

Notes forming part of the Standalone Financial Statements

Note No. : 2 Significant accounting policies (contd.)

2.3 Revenue recognition
Contract with a customer is accounted for only when it has commercial substance and all of the following criteria are met:
(i) Parties to the contract have approved the contract and are committed to performing their respective obligations;

(ii) Each party’s rights regarding the goods or services to be transferred and payment terms there against can be identified;
(iii) Consideration in exchange for the goods or service to be transferred is collectible and determinable.
(a) Revenue from operations
Revenue is measured based on the consideration specified in the contract with the customers and excludes amounts collected on
behalf of third parties. The revenue from sales is recognized when control over the goods or services have been transferred and/or
goods/services are delivered/provided to the customers. Delivery occurs when the goods have been shipped or delivered to the
specific location as the case may be and the customer has either accepted the goods under the contract or Company has sufficient
evidence that all the criteria for acceptance have been satisfied. For further information, Refer to Note No. 36(11).

Returns, discounts and rebates as determined are deducted from sales.
(b) Other Income
(i) Interest income
For all debt instruments measured at amortized cost, interest income is recognized using the Effective Interest Rate (“EIR”).
Interest income is included in “Other Income” in the statement of profit and loss.
(ii) Dividend Income
Dividend income is recognized when Company’s right to receive the dividend is established, i.e. in case of interim dividend, on
the date of declaration by the Board of Directors; whereas in case of final dividend, on the date of approval by the shareholders.
(iii) Insurance claims
Insurance claims are accounted for based on claims admitted/expected to be admitted and to the extent that there is no
uncertainty in receiving the claims.
2.4 Property, plant and equipment (“PPE”) and Capital work-in-progress (“CWIP”)
(a) Property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses if any.
For this purpose, cost includes deemed cost on the date of transition and the purchase cost of assets, including non-recoverable
duties and taxes, and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest
on borrowings used to finance the construction of qualifying assets is capitalized as part of the cost of the asset until such time
that the asset is ready for its intended use.

(b) Costs incurred subsequent to initial capitalization are included in the asset’s carrying amount only when it is probable that future
economic benefits associated therewith will flow to the Company and it can be measured reliably.
The carrying amount of the replaced part is derecognized. The costs of regular servicing of property, plant and equipment are
recognized in the statement of profit and loss as and when incurred.
The present value of the expected cost for the decommissioning of an asset after its use, if any, is included in the cost of the
respective asset if the recognition criteria for provisions are met.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
components; otherwise, these are added to and depreciated over the useful life of the main asset.

The cost and related accumulated depreciation are eliminated from the financial statements upon sale or when no future
economic benefits are expected to arise from the use of the asset and the resultant gains or losses are recognized in the
statement of profit and loss.
(c) Property, plant and equipment includes leasehold land classified as Right of use assets.

164 | Balrampur Chini Mills Limited