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From Significant Accounting Policies
Fixed assets
Capital expenditure on assets where neither the land nor the asset is owned by the company is reflected as a distinct item in capital work in progress till the period of completion and thereafter in the fixed assets.
Depreciation
Capital expenditure referred to in Policy 2.3 is amortised over a period of five years from the year in which the first unit of project concerned comes into commercial operation and thereafter from the year in which the relevant asset becomes available for use.
From Notes to Accounts
During the year the company has received the opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (EAC of ICAI) and as per opinion of EAC, expenditure incurred for creation of assets not within the control of company should be charged to Profit & Loss account in the year of incurrence itself. The company has represented to the EAC of ICAI that such expenditure, being essential for setting up of a hydro project, should be allowed to be capitalised. Pending receipt of further opinion/communication from the EAC, the accounting treatment as per existing accounting practices/ policies has been continued.
From Auditor’s Report
Further to our comments in the Annexure referred to in Para 3 above, without qualifying our report, we draw attention to (a) ……., (b) ……. and (c) Note No. 12 (Schedule 24 — Notes to Accounts) regarding having referred the issue of capitalisation of expenditure incurred for creation of assets (enabling assets) not within the control of the company, to Expert Advisory Committee of the Institute of Chartered Accountants of India.
