Page 141 - Kolte Patil AR 2019-20
P. 141

Notes forming part of the standalone financial statements

            U.   Significant management judgement in applying accounting policies and estimation uncertainty
                The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that
                affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.
                Significant management judgements:
                The following are significant management judgements in applying the accounting policies of the Company that have the most
                significant effect on the financial statements.
                1.  Recognition of deferred tax assets – The extent to which deferred tax assets can be recognized is based on an assessment of the
                   probability of the future taxable income against which the deferred tax assets can be utilized.
                2.  Evaluation of indicators for impairment of assets – The evaluation of applicability of indicators of impairment of assets requires
                   assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
                3.  Contingent liabilities – At each balance sheet date basis the management judgment, changes in facts and legal aspects, the
                   Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future
                   outcome may be different from this judgement.

                Significant management estimates:
                Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets,
                liabilities, income and expenses is provided below. Actual results may be different.
                1.   Defined benefit obligation (DBO) – Management’s estimate of the DBO is based on a number of critical underlying assumptions
                   such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation
                   in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
                2.  Fair value measurements – Management  applies  valuation techniques to determine the fair value of financial instruments
                   (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market
                   participants would price the instrument.
                3.  Useful lives of depreciable/ amortisable assets – Management reviews its estimate of the useful lives of depreciable/amortisable
                   assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and
                   economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and
            2A.  New Accounting Standards, Amendments to Existing Standards, Annual Improvements and Interpretations Effective
                Subsequent to March 31, 2020:
                Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards. There is no such notification
                which would have been applicable from April 1, 2020.

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