ANALYSIS OF ACCOUNTING POLICIES AUTOMOBILE SECTOR: MAHINDRA & MAHINDRA ,TATA MOTORS LTD AND MARUTI SUZUKI INDIA

LTD BASIS OF ANALYSIS REVENUE RECOGNITION MAHINDRA AND MAHINDRA Revenue on Sales of products and services is recognised when the products are delivered, Shipped(exports) or services rendered. TATA MOTORS MARUTI SUZUKI LTD This company Revenue on recognizes revenue domestic and on the sale of its export sales are products i.e. when recognised on they are delivered transfer of to its significant dealer/customer or risks and rewards to carrier in case to the customer of an export, which takes place transferring both on dispatch of risk and rewards goods from the along with the factory / stockyard ownership. / storage area and port respectively. fixed assets are stated at cost of acquisition or construction less accumulated depreciation Cost includes purchase price and directly attributable costs for self constructed assets and direct costs incurred upto the date the asset is ready for its intended use. Fixed assets are carried at cost of acquisition or construction in the year of capitalisation less accumulated depreciation.

FIXED ASSETS

Fixed Assets are carried at cost less accumulated depreciation . Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. In case of foreign currency loans , the exchange differences are adjusted in the cost of the asset

DEPRICIATION &

Depreciation is calculated on

Depreciation is provided on

Depreciation is provided on

AMORTISATION Straight Line Method(SLM) as per Schedule XIV to the Companies Act, 1956, except for :

straight line method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Certain items of Act, 1956 except Plant and Machinery in the case of : individually costing more than Rs. 5,000 Leasehold land over their useful and assets taken on lives as determined lease: amortised by the Company. over the period of lease Cars and Vehicles at 15% of cost. Technical Knowhow: 16.67% Depreciation on the (SLM) assets is calculated after adjusting the Laptops :23.75% revaluation effects. (SLM) Intangible Assets are initially measured at cost and amortised so as per itseconomic Benefits are consumed. (a) Technical Knowhow : amortised over the estimated period of Benefit, not exceeding six years from the year of purchase of the technology. (b) Development Expenditure : amortised over the estimated period of Benefit, not exceeding fve years. (c) Software Expenditure : Cars : 23.75% (SLM) Assets acquired prior to April 1,1975 : Written Down Value basis Software in excess of Rs. 25,000 is amortised over a period of sixty months or on the basis of estimated useful life whichever is lower. (ii) Product development cost : amortised over a period of 36 -120 months or on the basis of actual production to

straight line(SLM) pro-rata basis from the month in which each asset is put to use as per in Schedule XIV to the Companies Act, 1956 except for: Leasehold land and assets acquired on lease: amortised over the period of lease. In certain fixed assets higher rate of depreciation has been charged due to the estimate of the useful life of the asset. Plant and Machinery 8 11 Years Dies and Jigs 4 Years Electronic Data Processing Equipments 3 Years In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaining useful life of the assets. c) All assets, the individual WDV

amortised over three years equally commencing from the year in which the expenditure is incurred.

planned production volume over such period. (iv) Depreciation is not recorded on capital work-inprogress until construction and installation are complete and asset is ready for its intended use.

of which at the beginning of the year is Rs. 5,000 or less, are: depreciated at 100%. Assets purchased during the year costing Rs. 5,000 or less are depreciated at 100%. d)Royalty is amortized on a straight line basis over 4 years Inventories are valued at the lower of cost, determined on the weighted average basis, and net realisable value. b) Tools are written off over a period of three years except for tools valued at Rs. 5,000 or less individually which are charged against revenue in the year of purchase. c) Machinery spares are charged to revenue on consumption except those valued at Rs. 5,000 or less individually, which are charged off to revenue in

INVENTORY VALUATION

Inventories(including W-I-P) are valued at the lower of cost(determined on the basis of weighted avg method) or net realisable value. Excise duty is included in the value of fnished goods inventory. Stores, spares and tools other than obsolete and slow moving items are carried at cost. Obsolete ones are valued at cost or estimated realisable value, whichever is lower.

Inventories are valued at the lower of cost and net realisable value. Cost of raw materials and consumables are ascertained on a moving weighted average

the year of purchase. INVESTMENTS Long term investments are valued at cost. provision for diminution in value is made to recognise a decline other than temporary in the value of investments. Current investments are valued at the lower of cost and fair value, (determined by category of investment.) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year-end rates. (1)The exchange diference arising on the settlement as also on translation of monetary items at the end of the year is recognised as income or expense, as the case may be. Long term investments are stated at cost less other than temporary diminution in value, if any. Current investments are valued at lower of cost and fair value FV of the mutual funds is determined on a portfolio basis. Long-term investments are valued at cost less other than temperory devaluation in value.In case of a permanent diminution in provision is made. Current investments are valued at the lower of cost and fair value. Transactions are recorded at the rate prevailing on the date of transaction. The necessary adjustments with respect to monetary transactions are made in the P & L A/C and in balance sheet for the acquisition cost relating to a particular asset

FOREIGN CURRENCY TRANSACTION

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Monetary items are translated at year end exchange rates.

(1) Exchange diferences arising on settlement of transactions recognized as income or expense in the year in which they arise. Exchange diferences (2)Exchange relating to long term diferences foreign loans to the considered as extent they are used borrowing cost are for fnancing the capitalized to the acquisition of fixed extent these relate assets are adjusted in to the acquisition / the cost of construction of

assets and Foreign Currency Monetary Item Translation Difference Account and amortised over the balance term of it or 31st march 2011,whichever early.

qualifying Assets and are adjusted to the asset. These are put in Foreign Currency Monetary Item Translation Difference Account, to be amortized upto March 31, 2011 or the date of its maturity, earliest