43 useful life and residual values of property plant

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4.3 Useful life and residual values of property, plant and equipment The Company reviews appropriateness of the rate of depreciation, useful life and residual value used in the calculation of depreciation. Further, where applicable, an estimate of the recoverable amount of assets is made for possible impairment on an annual basis. In making these estimates, the Company uses the technical resources available with the Company. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with corresponding effects on the depreciation charge and impairment. 4.4 Impairment of non-financial assets The Company assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Non-financial assets are also tested for impairment when there are indicators that the carrying amounts may not be recoverable. 4.5 Provision for compensated absences The Company accounts for compensated absences on the basis of un-availed earned leave balance of each employee at the end of the year. 5 SIGNIFICANT ACCOUNTING POLICIES 5.1 The accounting policies adopted in the preparation of these financial statements are consistent with those of previous financial year except as mentioned in note 2.2 and note 5.2. 5.2 Change in Accounting Policy During the year the Company changed its accounting policy for classification of empty bottles, shells, pallets and barrels from Inventory to property, plant and equipment so as to give a better presentation. Previously these items were considered to be of a fragile nature and hence were not expected to last long. However recent experience indicates that such items have been in utilization of the Company for an extended period of time and accordingly the recently adopted policy provides reliable and more relevant information.
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26 The policy has been applied prospectively because it was not practicable to estimate the effects of applying the policy either retrospectively or prospectively from any earlier date. Accordingly, the adoption of the new policy has no effect on prior years. The effect on the current year is to increase the closing carrying amount of property, plant and equipment by Rs. (thousand) 185,892 decrease in closing carrying amount of inventory by Rs. (thousand) 227,755 increase depreciation expense by Rs. (thousand) 61,953 decrease in deterioration in Shells, Pallets and Barrels by Rs. (thousand) 20,090 and reduce tax expense by Rs. (thousand) 5,980. 5.3 Property, plant and equipment Owned assets Property, plant and equipment except for freehold land and leasehold land held on 99 years lease, are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Free hold and lease hold land are also stated at cost.
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