Page 110 - Annual Report 2019-20

notes forming part of the financial statements Notes forming part of the financial statements 109

In respect of the foreign offices/ branches, which are integral foreign operations, all revenues and For certain items of Property, Plant and Equipment, the Company depreciates over estimated useful life
expenses during the month are reported at monthly average rates. Outstanding balances in respect which are different from the useful lives prescribed under Schedule II to the Companies Act, 2013 which is
of monetary assets and liabilities are restated at the year end exchange rates. Outstanding balances based upon technical assessment made by technical expert and management estimate. The management
in respect of non-monetary assets and liabilities are stated at the rates prevailing on the date of the believes that these estimated useful lives are realistic and reflect fair approximation of the period over
transaction. net gain/ loss on foreign currency translation are recognised in the Statement of Profit which the assets are likely to be used. The estimated useful lives, residual values and depreciation method PIDILITE ANNUAL REPORT 2019-20
and Loss. are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted
2.7 Share-based payment transactions of the Company for on a prospective basis.
The estimated useful lives are as mentioned below:
Equity-settled share-based payments to employees providing similar services are measured at the fair
value of the equity instruments at the grant date.
Type of Asset Useful Life
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will Buildings 30 - 60 years
eventually vest, with a corresponding increase in equity. Plant and Machinery 6 - 25 years
2.8 Taxation Vehicles 8 - 10 years
Income tax expense represents the sum of the tax currently payable and deferred tax. Furniture and Fixtures 10 years
2.8.1 Current Tax Office Equipment 3 - 6 years
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before
tax’ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable 2.10 Intangible Assets
or deductible in other years and items that are never taxable or deductible. The Company’s current tax is 2.10.1 Intangible assets acquired separately
calculated using applicable tax rates that have been enacted or substantively enacted by the end of the
reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable. Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
2.8.2 Deferred Tax amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over
their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities each reporting period, with the effect of any changes in estimate being accounted for on a prospective
in the financial statements and the corresponding tax bases used in the computation of taxable profit. basis.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets Intangible assets with indefinite useful lives that are acquired separately are carried at cost less
are generally recognised for all deductible temporary differences to the extent that it is probable that accumulated impairment losses.
taxable profits will be available against which those deductible temporary differences can be utilised.
2.10.2 Intangible assets acquired in a business combination
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of Intangible assets acquired in a business combination and recognised separately from goodwill are initially
the asset to be recovered. recognised at their fair value at the acquisition date (which is regarded as their cost).
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in Subsequent to initial recognition, intangible assets acquired in a business combination are reported at
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible
or substantively enacted by the end of the reporting period. assets that are acquired separately.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow 2.10.3 Internally generated Intangible Assets – Research and Development Expenditure
from the manner in which the Company expects, at the end of the reporting period, to recover or settle the Expenditure on research activities is recognised in Statement of Profit and Loss in the period in which it
carrying amount of its assets and liabilities. is incurred.
2.8.3 Current and Deferred Tax for the year An internally generated intangible asset arising from development is recognised if and only if it meets the
Current and deferred tax are recognised in Statement of Profit and Loss, except when they relate to items recognition criteria of intangible assets. The amount initially recognised is the sum total of expenditure
that are recognised in other Comprehensive Income or directly in equity, in which case, the current and incurred from the date when the intangible asset first meets the recognition criteria. Where no intangible
deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively. asset can be recognised, development expenditure is recognised in Statement of Profit and Loss in the
period in which it is incurred.
2.9 Property, Plant and Equipment Subsequent to initial recognition, internally generated intangible assets are reported at cost less
2.9.1 Property, Plant and Equipment acquired separately accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets
Freehold land is stated at cost and not depreciated. Buildings, plant and machinery, vehicles, furniture and acquired separately.
office equipments are stated at cost less accumulated depreciation and accumulated impairment losses. 2.10.4 Useful lives of Intangible Assets
An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic Estimated useful lives of the Intangible Assets are as follows:
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of Property, Plant and Equipment is determined as the difference between the Type of Asset Useful Life
sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss. Computer Software 6 years
PIDILITE ANNUAL REPORT 2019-20 2.9.3 at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, 2.11 Impairment of Tangible and Intangible Assets other than Goodwill
Capital Work-in-Progress
2.9.2
10 years
Technical Knowhow

Properties in the course of construction for production, supply or administrative purposes are carried
non-Compete Fees
7-10 years
borrowing costs capitalised in accordance with the Company’s accounting policy. Such properties are
Copyrights
Indefinite Life
classified and capitalised to the appropriate categories of Property, Plant and Equipment when completed
and ready for intended use. Depreciation of these assets, on the same basis as other property assets,
Indefinite Life
Trademark
commences when the assets are ready for their intended use.
Depreciation
intangible assets to determine whether there is any indication that those assets have suffered an
Work-in-Progress) less their residual values over their useful lives, using the straight-line method as per the
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
useful life prescribed in Schedule II to the Companies Act, 2013.
108 Depreciation is recognised so as to write off the cost of assets (other than Freehold Land and Capital At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable