Page 247 - BCML AR 2019-20

BALRAMPUR CHINI MILLS LIMITED

Notes forming part of the Consolidated Financial Statements

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

(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 consolidated 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 consolidated 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 consolidated 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
consolidated statement of profit and loss.
(c) Property, plant and equipment includes leasehold land classified as Right-of -use assets.
(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.

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