Page 167 - BCML AR 2019-20

BALRAMPUR CHINI MILLS LIMITED

Notes forming part of the Standalone Financial Statements

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

(d) Depreciation methods, estimated useful lives and residual value
Depreciation on items of property, plant and equipment commences when the assets are available for their intended use. It is
provided on a straight-line basis to allocate their cost, net of their residual value over the estimated useful life of the respective
asset specified under Schedule II to the Companies Act, 2013 except in respect of items of “Plant and Equipment” and “Vehicles”
whose estimated useful lives are determined based on technical evaluation to reflect the actual usage of the assets. The
management believes that these estimated useful lives are realistic and reflect a fair approximation of the period over which the
assets are likely to be used.
The estimated useful lives considered are as follows:
Category 31st March 2020
Buildings 03 - 60 years
Roads 03 - 10 years
Plant and equipment 05 - 25 years
Furniture and fixtures 10 years
Vehicles 05- 10 years
Office equipments 03 - 05 years
Computers 03 - 06 years
Electrical installation and equipment 05 - 10 years
Pipelines 15 years
Each item of property, plant and equipment individually costing H 5,000/- or less are depreciated over a period of one year from
the date the said asset is available for use.
Leasehold land classified as Right-of-use assets are depreciated from the commencement date on a straight-line basis over the
shorter of the lease term and useful life of the underlying asset.
The residual values of assets (individually costing more than H 5,000/-) is not more than 5% of the original cost of the asset.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each financial year and are given
effect to, wherever appropriate.
(e) Expenditure during the construction period
Directly attributable expenditure (including finance costs relating to borrowed funds for construction or acquisition of property,
plant and equipment) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to
the assets and are shown under Capital work-in-progress. Capital work-in-progress is stated at the amount incurred up to the
balance sheet date on assets or property, plant and equipment that are not yet ready for their intended use.
2.5 Intangible assets (Computer Software)
(a) Where computer software is not an integral part of a related item of computer hardware, the software is treated as an intangible
asset.
Intangible assets purchased are measured at cost as at the date of acquisition, less accumulated amortization and impairment
losses if any.
For this purpose, cost includes deemed cost on the date of transition and acquisition price, license fees, non-refundable taxes and
costs of implementation/system integration services and any directly attributable expenses, wherever applicable for bringing
the asset to its working condition for the intended use.
(b) Amortization methods, estimated useful lives and residual value
Computer software is amortized on a straight-line basis (without keeping any residual value) over its estimated useful lives of five
years from the date they are available for use.

Annual Report 2019-20 | 165