FINANCIAL REPORTING AND

ANALYSIS ASSIGNMENT - 7
 1. Bosch Ltd.
Revenue Recognition

Revenue recognition: Revenue is measured at the fair value of the consideration received or
receivable. The Company recognizes revenue when the amount of revenue can be reliably
measured, it is probable that the future economic benefits will flow to the entity and specific criteria
have been met for each of the Company’s activities as mentioned below:

(i) Sale of products is recognized when the significant risks and rewards of ownership in the goods
are transferred to the buyer which is based on the agreed terms. Revenue is based on price agreed
with the customers. Amounts disclosed as revenue are inclusive of excise duty upto June 30, 2017
and are net of returns, trade discounts, cash discounts, sales incentives, sales tax, etc.

(ii) Sale of services with respect to fixed price contracts is recognized based on agreements/
arrangements with the concerned parties using the proportionate completion method and revenue
with respect to time-and-material contracts is recognized as and when the related services are
performed.

Inventory Valuation

Inventories are valued at lower of cost and net realizable value. Cost is generally ascertained on
weighted average basis. Cost of raw materials, traded goods and indirect materials include cost of
purchase and other costs incurred in bringing the inventories to their present location and condition.
The cost of finished goods and work in progress comprises raw materials, direct labour, other direct
costs and related production overheads. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale. Obsolete/ slow moving inventories are adequately provided for.

2. Berger Paints India Ltd.

Revenue from contract with customer Revenue from contracts with customers is recognised when
control of the goods or services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company has generally concluded that it is the principal in its revenue arrangements because it
typically controls the goods or services before transferring them to the customer. Sale of Goods
Revenue from sale of goods is recognised at the point in time when control of the asset is
transferred to the customer, generally on delivery of the goods. The normal credit term is 30 to 90
days upon delivery. The revenue is based on the consideration defined in the contract with a
customer, including variable consideration, such as discounts, volume rebates, rights to return or
other contractual reductions. As the period between the date on which the Company transfers the
promised goods to the customer and the date on which the customer pays for these goods is
generally one year or less, no financing components are considered. The Company considers
whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated. The Company provides volume
rebates to certain customers once the quantity of products purchased by the customers during the
period exceeds a threshold specified in the contract. Generally, rebates are offset against the
amounts payable by the customer. To estimate the variable consideration for the expected future
rebates, the Company applies the expected value method. Certain contracts provide a customer
with a right to return the goods within a specified period. The Company uses the expected value
method to estimate the goods that will not be returned because this method best predicts the
amount of variable consideration to which the Company will be entitled. The requirements in Ind AS
on constraining estimates of variable consideration to are also applied in order to determine the
amount of variable consideration that can be included in the transaction price

Inventory Valuation

Inventories Raw materials, stores and spares and Packing Materials are valued at lower of cost and
estimated net realisable value. Cost is determined on weighted average basis. However, materials
and other items held for use in the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be sold are at or above cost.
Finished goods and Work-in-process are stated at the lower of cost and estimated net realisable
value. Cost of inventories constitutes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Traded goods are valued at lower of cost and net
realizable value. Cost includes cost of purchase and other costs incurred in bringing the inventories
to their present location and condition. Cost is determined on a weighted average basis. Net
realizable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and estimated costs necessary to make the sale. Provision is recognised for damaged,
defective or obsolete stocks where necessary. Cost of all inventories is determined using weighted
average method of valuation.

3. Jindal Steel and Power Ltd

Revenue is measured at fair value of the consideration received or receivable. The Company
recognizes revenue from sale of products net of discounts, sales incentives, rebates granted, returns,
VAT, sales tax and duties when the products are delivered to customer or when delivered to a
carrier for export sale, which is when significant risks and rewards of ownership pass to the
customer, Sale of product is presented gross of manufacturing taxes like excise duty, wherever
applicable.

- Income from aviation and other services is accounted for at the time of completion of service and
billing thereof.

- Revenue from sale of power is recognized when delivered and measured based on bilateral
contractual arrangements.

- Export benefits available are accounted for in the year of export, to the extent the realization of the
same is not considered uncertain by the Company.
- Government grants/ subsidies are recognized at fair value where there is reasonable certainty that
the grant /subsidy will be received and all attached conditions will be complied with. The
grant/subsidy is recognized in the statement of profit and loss on a systematic basis over the periods
in which the Company recognizes as expenses the related costs for which the grants are intended to
compensate.

Inventory Valuation

Inventories are valued at lower of cost, computed on weighted average basis, or net realizable
value. Cost of inventories includes in case of raw material, cost of purchase and incidental expenses;
in case of work-in-progress, estimated direct cost and appropriate proportion of administrative and
other overheads; in case of finished goods, estimated direct cost and appropriate administrative and
other overheads and excise duty; and in case of traded goods, cost of purchase and other costs.

Scrap is valued at estimated realizable value. However raw materials, components, stores and spares
held for use in the production of finished goods are not written down below cost if the finished
products are expected to be sold at or above cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.

Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges,
recognized in OCI, in respect of the purchases of raw materials.

4. PNB
Revenue Recognition

1 Income & expenditure (other than items referred to in paragraph 3.5) are generally accounted for
on accrual basis.

2 Income from Non- Performing Assets (NPAs), comprising of advances, and investments, is
recognized upon realization, as per the prudential norms prescribed by the RBI/ respective country
regulators in the case of foreign offices (hereafter collectively referred to as Regulatory Authorities).

3 Recoveries in NPA accounts (irrespective of the mode / status / stage of recovery actions) are
appropriated in the following order of priority : - a) Expenditure/out of pocket expenses incurred for
recovery (earlier recorded in memorandum dues); b) Principal irregularities i.e. NPA outstanding in
the account. c) Towards the interest irregularities/accrued interest.

4 The sale of NPA is accounted as per guidelines prescribed by RBI and as disclosed under Para 5.3.

5 Commission (excluding on Government Business), interest on overdue bills, exchange, locker rent,
income from merchant banking transactions and Income on Rupee Derivatives designated as Trading
are accounted for on realization and insurance claims are accounted for on settlement.

6 In case of suit filed accounts, related legal and other expenses incurred are charged to Profit & Loss
Account and on recovery the same are accounted for as such.

7 Income from interest on refund of income tax is accounted for in the year the order is passed by
the concerned authority.
8 Lease payments including cost escalation for assets taken on operating lease are recognized in the
Profit and Loss Account over the lease term in accordance with the AS 19 (Leases) issued by ICAI.

9 Provision for Reward Points on Debit/Credit cards is made based on the accumulated outstanding
points in each category.

10 Interest on unpaid and unclaimed matured term deposits is accounted for at savings bank rate.

11 Dividend is accounted for as and when the right to receive the dividend is established.

Inventory Valuation

Banks do not produce physical goods; instead, they borrow and lend funds

Given the nature of a bank's business, its balance sheet does not contain inventories, typical
accounts payable and accounts inventories

PNB does not have an inventory and hence, an inventory valuation method.

5. GRM Infrastructure Ltd

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking into
account contractually defined terms of payment and excluding taxes or duties collected on behalf of
the government. The Company has concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude
and is also exposed to inventory and credit risks.

The specific recognition criteria described below must also be met before revenue is recognized
Revenue from construction activity Construction revenue and costs are recognized by reference to
the stage of completion of the construction activity at the balance sheet date, as measured by the
proportion that contract costs incurred for work performed to date bear to the estimated total
contract costs. Where the outcome of the construction cannot be estimated reliably, revenue is
recognized to the extent of the construction costs incurred if it is probable that they will be
recoverable. When the outcome of the contract is ascertained reliably, contract revenue is
recognized at cost of work performed on the contract plus proportionate margin, using the
percentage of completion method. Percentage of completion is the proportion of cost of work
performed to-date, to the total estimated contract costs. The estimated outcome of a contract is
considered reliable when all the following conditions are satisfied:

i. The amount of revenue can be measured reliably,

ii. It is probable that the economic benefits associated with the contract will flow to the

Company,

iii. The stage of completion of the contract at the end of the reporting period can be measured
reliably,

iv. The costs incurred or to be incurred in respect of the contract can be measured reliably

Provision is made for all losses incurred to the balance sheet date. Variations in contract work,
claims and incentive payments are recognized to the extent that it is probable that they will result in
revenue and they are capable of being reliably measured. Expected loss, if any, on a contract is
recognized as expense in the period in which it is foreseen, irrespective of the stage of completion of
the contract. For contracts where progress billing exceeds the aggregate of contract costs incurred
to-date and recognized profits (or recognized losses, as the case may be), the surplus is shown as the
amount due to customers. Amount received before the related work is performed are disclosed in
the Balance Sheet as a liability towards advance received. Amounts billed for work performed but
yet to be paid by the customers are disclosed in the Balance Sheet as trade receivables.

Income from management/ technical services

Income from management/ technical services is recognized as per the terms of the agreement on
the basis of services rendered.

Inventory Valuation

Raw materials, components, stores and spares are valued at lower of cost and net realizable value.

However, materials and other items held for use in the production of inventories are not written
down below cost if the finished products in which they will be incorporated are expected to be sold
at or above cost.

Cost of raw materials, components and stores and spares is determined on a weighted average
basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated

costs of completion and the estimated costs necessary to make the sale.

Costs incurred that relate to future activities on the contract are recognized as “Contract work in

progress”.

Contract work in progress comprising construction costs and other directly attributable overheads is

valued at lower of cost and net realizable value.