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moneycontrol.com भारत | लेखांकन नीति > Transport & Logistics > लेखांकन नीति फॉलोड से किंगफिशर एयरलाइंस - बीएसई: 532747, NSE: KFA

किंगफिशर एयरलाइंस

बीएसई: 532747  |  NSE: KFA  |  ISIN: INE438H01019  |  Transport & Logistics

खोजें किंगफिशर एयरलाइंस कनेक्शन मार्च 12
लेखांकन नीति साल : मार्च '13
(a) Basis of preparation
 
 The financial statements have been prepared in accordance with Indian
 Generally Accepted Accounting Principles (GAAP) under the historical
 cost convention on the accrual basis. GAAP comprises mandatory
 accounting standards as specified in the Companies (Accounting
 Standards) Rules, 2006, the provisions of the Companies Act, 1956 and
 guidelines issued by the Securities and Exchange Board of India.
 Accounting policies have been consistently applied except where a newly
 issued accounting standard is initially adopted or a revision to an
 existing accounting standard requires a change in the accounting policy
 hitherto in use. Further, the financial statements are presented in the
 general format specified in schedule VI to the Companies Act, 1956
 (the Act'').
 
 (b) Use of estimates
 
 In preparation of the financial statements in conformity with generally
 accepted accounting principles, estimates and assumptions, where
 necessary, have been made based on management''s best knowledge and
 experience.  Accordingly, actual results may differ from such
 estimates.
 
 (c) Revenue recognition
 
 Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and revenue can be reliably
 measured. Revenue from charter services is recognized based on services
 provided and billed as per the terms of the contracts with the
 customers provided that the collection is reasonably certain. Revenue
 from sale of tickets of the airline and cargo operations is recognized
 in the period, in which the service is provided, i.e. on flown /
 carried basis. Such revenue is net of statutory fees to be collected
 from customers as per government regulations. Unearned revenue
 represents consideration on sale of passenger tickets and cargo against
 which the Company has to provide services in future periods and is
 included under Advances received / Forward sales. The same is released
 to the Statement of Profit and Loss as the services are rendered.
 
 Fees for passenger initiated changes and cancellations of tickets are
 recognized as revenue in the period in which such changes /
 cancellations are effected.
 
 Interest income is recognized on a time proportionate method when the
 right to receive income is established and that collection is
 reasonably certain. Income from sale of advertisement space is
 recognized on accrual basis over the period the advertisements are
 displayed.
 
 The Company enters into barter arrangements with other parties for
 providing services in exchange for the Company''s advertising in the
 other party''s media or in exchange for other services or goods. Such
 transactions are recorded at the fair value of the services / goods
 received from the other party, or at the fair value of the services
 provided by the Company if it is not feasible to determine the fair
 value of the services / goods received.
 
 (d) Fixed assets and Intangible assets
 
 Fixed assets and intangible assets are stated at cost of acquisition
 less accumulated depreciation / amortization and impairment losses (if
 any). Cost comprises the purchase price and any attributable cost of
 bringing the asset to its working condition for its intended use and
 also includes cost of modification and improvements to leased assets.
 Borrowing costs relating to acquisition of fixed assets are also
 included to the extent they relate to the period till such assets are
 ready to be put to use.
 
 Cost of fixed assets not ready for intended use as of the balance sheet
 date are disclosed under capital work-in-progress. Advance paid towards
 acquisition of fixed assets are included in long term loans and
 advances.
 
 (e) Depreciation
 
 Depreciation on fixed assets, except non-compete fees, trademarks,
 design - aircraft interiors, software, leasehold improvements, is
 provided on a straight line basis at the rates prescribed under
 schedule XIV to the Companies Act, 1956 which are estimated to be the
 useful life of fixed assets by the management. Additions are
 depreciated on a pro-rata basis from the date of installation till the
 date the assets are sold or disposed.
 
 1) Non Compete fees are amortized over the period of agreement (i.e.
 five years).
 
 2) Trademarks are amortized over the period of four years.
 
 3) Design - Aircraft Interiors are amortized over the period of seven
 years.
 
 4) Software is depreciated over a period of 1 - 4 years, based on
 estimated useful life as ascertained by the management.
 
 5) Leasehold improvements on operating leases are depreciated over the
 shorter of the period of the lease and their estimated useful lives.
 
 6) Cost of major maintenance and overhaul of the engines are amortized
 over the period of estimated useful life of the repairs (3 years).
 
 7) Movable cabins and mobile phones are depreciated over the period of
 five and two years, respectively, on a straightline method.
 
 (f) Borrowing Costs
 
 Borrowing costs attributable to the acquisition or construction of a
 qualifying asset are capitalized as a part of the cost of the assets.
 Other borrowing costs are recognized as an expense in the period in
 which they are incurred.  Borrowing costs include amortization of
 ancillary costs incurred in connection with the arrangement of
 borrowings.  The unamortized portion of ancillary costs incurred in
 connection with the arrangement of borrowings is included under Loans
 and Advances''.
 
 (g) Leases - Where the Company is a lessee
 
 Finance leases, which effectively transfer to the Company substantially
 all the risks and benefits incidental to ownership of the leased item,
 are capitalized at the lower of the fair value and present value of the
 minimum lease payments at the inception of the lease term and disclosed
 as leased assets. Lease payments are apportioned between the finance
 charges and reduction of the lease liability based on the implicit rate
 of return. Finance charges are charged directly against income. Lease
 management fees, legal charges and other initial direct costs are
 capitalized.
 
 If there is no reasonable certainty that the Company will obtain the
 ownership by the end of the lease term, capitalized leased assets are
 depreciated over the shorter of the estimated useful life of the asset
 and the lease term.
 
 Leases where the lessors effectively retain substantially all the risks
 and benefits of ownership over the leased term are classified as
 operating leases. Operating lease payments including expenses incurred
 for bringing the leased asset to its working condition for intended use
 are recognized as an expense in the Statement of Profit and Loss on a
 straight-line basis over the lease term.
 
 Profit or loss on sale and leaseback arrangements resulting in
 operating leases are recognized immediately in case the transaction is
 established at a fair value, else the excess over the fair value is
 deferred and amortised over the period for which the asset is expected
 to be used. If the sale price is below the fair value and the loss is
 compensated by future lease payments at below market price, the same is
 deferred and amortized in proportion to the lease payments over the
 period for which the asset is expected to be used. If the fair value at
 the time of sale and lease back transaction is less than the carrying
 amount of the asset, a loss equal to the amount of difference between
 the carrying amount and fair value is recognised immediately. In case
 of sale and leaseback arrangement resulting in a finance lease, any
 excess or deficiency of sales proceeds over the carrying value is
 deferred and amortised over the lease term in proportion to the
 depreciation of the leased asset.
 
 (h) Impairment of assets
 
 The carrying amounts of assets are reviewed at each balance sheet date
 if there is any indication of impairment based on internal / external
 factors. An impairment loss is recognized wherever the carrying amount
 of an asset exceeds its recoverable amount. The recoverable amount is
 the greater of the asset''s net selling price and value in use. In
 assessing value in use, the estimated future cash flows are discounted
 to their present value at the weighted average cost of capital. After
 impairment, depreciation is provided on the revised carrying amount of
 the asset over its remaining useful life. A previously recognized
 impairment loss is increased or reversed depending on changes in
 circumstances. However, the carrying value after reversal is not
 increased beyond the carrying value that would have prevailed by
 charging usual depreciation if there was no impairment.
 
 (i) Maintenance costs
 
 In respect of aircraft, aircraft engines and helicopters, the Company
 has entered into maintenance arrangements.  Payments made to lessors
 for major maintenance expenditure as per the related maintenance
 agreements, comprising fixed period-based amounts and variable
 activity-based amounts are initially considered as maintenance deposits
 and expensed as and when maintenance expenditure is
 incurred/termination of agreements.
 
 (j) Inventory
 
 Inventories are valued at lower of cost or net realizable value. Cost
 of engineering inventories is determined on first in first out basis.
 In respect of reusable items such as rotables, special tools etc,
 provision for amortization / obsolescence is made based on the
 estimated useful life of the aircraft as derived from schedule XIV to
 the Companies Act, 1956.  In-flight inventory is valued on weighted
 average basis, while inventory of fuel is valued on the basis of last
 fuel uplifted rates in respective aircrafts.
 
 (k) Investments
 
 Investments that are readily realizable and intended to be held for not
 more than a year are classified as current investments. All other
 investments are classified as long-term investments. Current
 investments are carried at lower of cost and fair value determined on
 an individual investment basis. Long-term investments are carried at
 cost.  However, provision for diminution in value is made to recognize
 a decline other than temporary in the value of the investments.
 
 (l) Employee Benefits
 
 (i) Defined Contribution Plan
 
 The Company contributes on a defined contribution basis to employees''
 provident fund and pension scheme towards post employment benefits, all
 of which are administered by the respective government authorities. The
 Company also contributes to social security schemes in respect of its
 employees at certain overseas offices. It has no further obligation
 beyond making its contribution which is expected in the year in which
 it pertains.
 
 (ii) Defined Benefit Plan
 
 The Company has a defined benefit plan namely gratuity for all its
 employees. The liability for the defined benefit plan of gratuity is
 determined on the basis of an actuarial valuation by an independent
 actuary at the year-end, which is calculated using Projected Unit
 Credit Method. Actuarial gains and losses are adjusted in the Statement
 of Profit and Loss.  (iii) Other long-term employee benefits
 
 The employees of the Company are entitled to leave as per the leave
 policy of the Company. The liability in respect of unutilized leave
 balances is provided based on an actuarial valuation carried out by an
 independent actuary as at the year-end and charged to the Statement of
 Profit and Loss. Actuarial gains and losses are adjusted in the
 Statement of Profit and Loss.
 
 (m) Income taxes
 
 Tax expense comprises current, deferred and fringe benefit taxes.
 Current income tax and fringe benefit tax are measured at the amount
 expected to be paid to the tax authorities in accordance with the
 Indian Income-tax Act, 1961. Deferred income taxes reflects the impact
 of current period timing differences between taxable and accounting
 income for the period and reversal of timing differences of earlier
 years. Deferred tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted as at the balance sheet date. Deferred
 tax assets are recognized only to the extent that there is reasonable
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realized. Deferred tax
 assets are recognized on carry forward of unabsorbed depreciation and
 tax losses only if there is virtual certainty that such deferred tax
 assets can be realized against future taxable profits. Unrecognized
 deferred tax assets of earlier years are re-assessed and recognized to
 the extent that it has become reasonably certain that future taxable
 income will be available against which such deferred tax assets can be
 realized.
 
 (n) Foreign currency transactions
 
 (i) Initial recognition
 
 Foreign currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate between
 the reporting and foreign currencies at the date of the transaction.
 
 (ii) Conversion
 
 Foreign currency monetary items are reported at rate prevailing on the
 balance sheet date. Non-monetary items which are carried in terms of
 historical cost denominated in a foreign currency are reported using
 the exchange rate at the date of the transaction; and non-monetary
 items which are carried at fair value or other similar valuation
 denominated in a foreign currency are reported using the exchange rates
 that existed when the values were determined.
 
 (iii) Exchange differences
 
 Exchange differences arising on the settlement of monetary items or on
 reporting Company''s monetary items at rates different from those at
 which they were initially recorded during the period, or reported in
 previous financial statements, are recognized as income or as expenses
 in the period in which they arise except that the Company had availed
 the option provided by notification (No. G.S.R. 225(E), dated March 31,
 2009) issued by the Ministry of Corporate Affairs read with accounting
 standard 11 in respect of foreign exchange differences in respect of
 long term monetary assets and liabilities. The Company has not availed
 the option of the relevant notification after March 31, 2010.
 
 (iv) Forward exchange contracts
 
 The Company uses forward exchange contracts to hedge its exposure to
 movements in foreign exchange rates.  The Company does not use the
 forward exchange contracts for trading or speculation purposes. In
 respect of foreign currency monetary assets or liabilities in respect
 of which forward exchange contract is taken, the premium or discount
 arising at the inception of forward exchange contracts is amortized as
 expense or income over the life of the contract. Exchange differences
 on such contracts are recognized in the statement of profit and loss in
 the period in which the exchange rates change. Any profit or loss
 arising on cancellation or renewal of forward exchange contract is
 recognized as income or as expense for the period. Pursuant to The
 Institute of Chartered Accountants of India''s announcement Accounting
 for Derivatives'', the Company marks-to-market all such outstanding
 derivative contracts at the end of the period and the resulting
 mark-to-market losses, if any, are recognized in the Statement of
 Profit and Loss.
 
 (o) Earnings per share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the period attributable to equity shareholders (after
 deducting preference dividends and relevant taxes) by the weighted
 average number of equity shares outstanding during the period. Partly
 paid equity shares are treated as a fraction of an equity share to the
 extent that they were entitled to participate in dividends relative to
 a fully paid equity share during the reporting period. The weighted
 average number of equity shares outstanding during the period is
 adjusted for events of bonus issue, bonus element in a rights issue to
 existing shareholders, share split, and reverse share split
 (consolidation of shares).
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the period attributable to equity shareholders and
 the weighted average number of shares outstanding during the period are
 adjusted for the effects of all dilutive potential equity shares.
 
 (p) Provisions
 
 A provision is recognized when an enterprise has a present obligation
 as a result of past event; and it is probable that an outflow of
 resources will be required to settle the obligation, in respect of
 which a reliable estimate can be made.  Provisions are not discounted
 to their present value and are determined based on best estimate
 required to settle the obligation at the balance sheet date. These are
 reviewed at each balance sheet date and adjusted to reflect the current
 best estimates.
 
 (q) Stock option compensation expense
 
 The Company accounts for stock option compensation expense based on the
 intrinsic value of the options granted which is the difference between
 the fair value of the share underlying the option and the exercise
 price of the option determined at the grant date. Compensation expense
 is amortized over the period of vesting on a straight-line basis.  The
 accounting value of the options net of deferred compensation expense is
 reflected as Employee stock option outstanding.
 
 (r) Initial costs on leased aircrafts
 
 Expenses directly attributable and incurred in relation to aircrafts
 acquired on operating lease arrangement are deferred and amortized over
 the period of lease of aircrafts. Such expenses interalia include
 initial borrowing costs incurred on pre delivery payments for aircrafts
 till the Company novates / assigns the right to acquire the aircrafts
 in favor of the lessors.
 
 (s) Incentives from aircraft manufacturers
 
 Incentives from aircraft manufacturers are credited to statement of
 Profit and Loss in the year when such incentives are made available to
 the Company as per the terms of aircraft purchase agreements. This
 includes incentives granted for the purpose of meeting certain revenue
 expenses.
 
 (t) Commission
 
 Commission to travel agents is recognized when the corresponding
 revenues are recognized as income on flown / carried basis.
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