Page 250 - BCML AR 2019-20

FINANCIAL STATEMENTS

Notes forming part of the Consolidated Financial Statements

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

payments made at or before the commencement date of the lease plus any initial direct cost less any lease incentives. They are
subsequently measured at cost less accumulated depreciation and impairment losses.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are
discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates.
2.11 Provisions, contingent liabilities and contingent assets
(a) A provision is recognized if, as a result of a past event, Company has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
not recognized for future operating losses.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation as at the
balance sheet date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognized as an asset. The expense relating to the provision is presented in the consolidated statement of profit
and loss, net of any reimbursement.
(b) Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable
estimate of the obligation cannot be made.
(c) A contingent asset is not recognized in the financial statements, however, it is disclosed, where an inflow of economic benefits
is probable.
(d) Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
2.12 Dividend payable
The final dividend on equity shares is recorded as a liability on the date of approval by the shareholders and interim dividends are
recorded as a liability on the date of declaration by the Company’s Board of Directors. A corresponding amount is recognized directly
in Equity.
2.13 Foreign currency transactions and translations
Transactions in foreign currencies are initially recorded at the exchange rate prevailing on the date the transaction first qualifies for
recognition.
Monetary assets and liabilities related to foreign currency transactions remaining outstanding on the balance sheet date are translated
at the exchange rate prevailing on the balance sheet date. Any income or expense arising on account of foreign exchange difference,
either on settlement or on translation, is recognized in the consolidated statement of profit and loss.
Non-monetary items which are carried at historical cost denominated in a foreign currency are translated using the exchange rate at
the date of the initial transaction.
2.14 Employee benefits
(a) Short-term employee benefits
Short-term employee benefits in respect of salaries and wages, including non-monetary benefits, are recognized as an expense
at the undiscounted amount in the consolidated statement of profit and loss in the year in which the related service is rendered.
(b) Defined contribution plans
The Company pays provident and other fund contributions to publicly administered fund as per related Government regulations.
The Company has no further obligation, other than the contributions payable to the respective funds. The Company recognizes
contribution payable to such funds as an expense when an employee renders the related service.

248 | Balrampur Chini Mills Limited