FUTURE JET AIRWAYS Accounting Policy

1. SIGNIFICANT ACCOUNTING POLICIES


A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :


The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) and complies with Accounting Standards specified under section 133 of the Companies Act, 2013 (‘the Act’) read with rule 7 of the Companies (Accountants) Rules 2014, read with Companies (Accounting Standards) Amendment Rules, 2016, applicable with effect from 1st April, 2016 and other generally accepted accounting principles (GAAP) in India, to the extent applicable.


The financial statements are prepared on accrual basis under the historical cost convention. The financial statements are presented in Indian rupees rounded off to the nearest rupees in lakhs.


All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in schedule III to the Act. Based on the nature of the services and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or noncurrent classification of assets and liabilities.


B. USE OF ESTIMATES :


The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets, liabilities and the disclosure of contingent liabilities on the date of the Financial Statements and the reported amount of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialized.


C. REVENUE RECOGNITION :


a) Passenger and Cargo income are recognised on flown basis, i.e. when the services are rendered.


b) The sales of tickets / airway bills (sales net of refunds) are initially credited to the “Forward Sales Account”. Income recognised as indicated above is reduced from the “Forward Sales Account” and the balance, net of commission and discount thereon, is shown under Other Current Liabilities.


c) The unuitilised balances in “Forward Sales Account” are recognised as income based on historical statistics, data and management estimates and considering Company’s refund policy.


d) Lease income on the Aircraft given on operating lease is recognised in the Statement of Profit and Loss on an accrual basis over the period of lease to the extent there is no significant uncertainty about the measurability and ultimate realisation.


e) Interest Income is recognised on time proportionate basis taking into the account the amount outstanding.


D. EXPORT INCENTIVE :


Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.


E. COMMISSION :


As in the case of revenue, the commission paid / payable on sales including any over-riding commission is recognised only on flown basis.


F. EMPLOYEE BENEFITS :


a) Defined Contribution plan :


A defined contribution plan is a post-employment benefit plan under which entity pays specified contributions to a separate entity and has no obligation to pay any future amounts. Company’s contribution paid / payable for the year to defined contribution schemes are charged to Statement of Profit and Loss.


b) Defined Benefit and Other Long Term Benefit plan :


Company’s liabilities towards defined benefit plans and other long term benefit plans are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent the benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested.


The employee benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.


c) Short Term Employee Benefits :


Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period the employee renders services. Such benefits include salaries, wages, bonus and ex-gratia.


G. FIXED ASSETS :


a) Property, Plant and Equipment :


Owned Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. All costs relating to acquisition and installation of property, plant and equipment upto the time the assets get ready for their intended use are capitalized.


Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are identified and accounted as separate components.


During the year, pursuant to the notification of companies (Accounting Standards) Amendment Rules 2016 and per the requirements of the revised Accounting Standard (AS) 10 ‘Property, Plant and Equipment’ (applicable effective from 1st April, 2016), the Company has decided to adopt historical cost model for all of its class of Fixed assets (from revaluation model recognised for certain assets i.e. Aircraft and Leasehold property).


Spare parts recognised as Property plant and equipment when it meets the definition of Property, plant and equipment.


The cost of improvements to Leased Properties as well as customs duty / modification cost incurred on Aircraft taken on operating lease have been capitalized and disclosed appropriately.


Property plant and equipment under construction are disclosed as capital work-in-progress. Advances paid for acquisition of Property plant and equipment are disclosed under long term advances.


b) Intangible Assets :


Intangible assets are recognised only if acquired and it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.


c) Assets Taken on Lease :


i. Operating Lease: Rentals are expensed with reference to the Lease Term and other considerations.


ii. Finance Lease / Hire Purchase: The lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as Fixed Assets with corresponding amount shown as Lease Liability (Outstanding Hire Purchase / Finance Lease Instalments). The principal component of the lease rentals is adjusted against the leased liability and interest component is charged to the Statement of Profit and Loss.


H. IMPAIRMENT OF ASSETS :


An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. However, any impairment loss on a revalued asset is recognised directly against the revaluation surplus held for the asset to the extent that the impairment loss does not exceed the amount held in revaluation surplus for the same asset. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.


I. DEPRECIATION / AMORTISATION :


a) Depreciation on Property, plant and equipment are provided on the ‘Straight Line Method’ over the useful life of assets as prescribed in Schedule II of the Companies Act, 2013. Further, Parts that are significant in cost in relation to the total cost of an asset having a different useful life than the remaining asset are depreciated over their respective remaining useful life. Expenditure incurred on improvements of assets acquired on operating lease is written off evenly over the balance period of the lease. Premium on leasehold land is amortised over the period of lease.


b) Intangible assets are amortised on straight line basis as follows :


i. Landing Rights acquired are amortised over a period not exceeding 20 years. Amortisation period exceeding 10 years is applied considering industry experience and expected asset usage.


ii. Trademarks are amortised over 10 years.


iii. Computer Software is amortised over a period not exceeding 36 months.


J. INVESTMENTS :


Current Investments are carried at lower of cost or quoted / fair value. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.


K. BORROWING COSTS :


Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.


L. FOREIGN CURRENCY TRANSACTIONS / TRANSLATION :


a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are restated at the period-end rates. The exchange difference between the rate prevailing on the date of transaction and on settlement / restatement (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.


b) Non-monetary foreign currency items are not restated at the period-end rates.


c) Exchange differences relating to long term foreign currency monetary items are accounted in line with the notifications issued by the Ministry of Corporate Affairs (MCA) dated 29th December, 2011 and 9th August, 2012 as under :


(i) to the extent they relate to financing the acquisition of property, plant and equipment and not regarded as interest, are added to or subtracted from the cost of such property, plant and equipment and depreciated over the balance useful life of the asset;


(ii) in other cases such differences are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) under reserves and surplus and amortised in the Statement of Profit and Loss over the balance term of the long term monetary item.


d) In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the period end rate is recognised in the Statement of Profit and Loss. Any profit / loss arising on cancellation of forward exchange contract is recognised as income or expense of the year. Premium / Discount arising on such forward exchange contracts is amortised as income / expense over the life of contract.


M. INVENTORIES :


Inventories are valued at cost or Net Realizable Value (NRV), whichever is lower. Cost of inventories comprises of all costs of purchase and other incidental cost incurred in bringing them to present location and condition. Cost is determined using the Weighted Average method. Provision is made for the obsolescence and other anticipated losses whereas considered necessary. During the year, pursuant to notification G.S.R.364(E) dated 30th March, 2016, the company has reclassified / capitalised certain eligible spare parts to Property plant and equipment from inventories.


N. AIRCRAFT MAINTENANCE AND REPAIR COSTS :


Aircraft Maintenance, Auxiliary Power Unit (APU), Engine Maintenance and Repair costs are expensed on incurrence as incurred except with respect to Engines / APU which are covered by third party maintenance agreement and these are accounted in accordance with the relevant terms.


O. TAXES :


Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income tax Act, 1961.


Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable / virtual certainty, as the case may be, that the asset will be realised in future.


P. SHARE ISSUE EXPENSES :


Issue Expenses are adjusted against the Securities Premium Account.


Q. SALE AND LEASE BACK TRANSACTION :


Profit or Loss on Sale and Lease back arrangements resulting in operating leases are recognised, in case the transaction is established at 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.


R. ACCOUNTING FOR DERIVATIVE INSTRUMENTS :


Interest Rate Swaps, Currency Option, Currency Swaps and other products, entered into by the Company for hedging the risks of foreign currency exposure (including interest rate risk) are marked to market and losses, if any, is accounted based on the principles of prudence as enunciated in Accounting Standard 1 (AS 1) “Disclosure of Accounting Policies”.


S. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :


Provisions involving a substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes when there is possible obligation arising from past events. Contingent Assets are neither recognised nor disclosed in the Financial Statements.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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