Page 148 - Tata_Chemicals_yearly-reports-2017-18

the financial statements. Contingent assets are not Depreciation methods, estimated useful lives and
disclosed in the financial statements unless an inflow residual value
of economic benefits is probable.
Depreciation on PPE (except leasehold improvements
2.4 Foreign currency translation and PPE acquired under finance lease) is calculated
using the straight-line method to allocate their cost,
The functional currency of Tata Chemicals Limited (i.e. net of their residual values, over their estimated
the currency of the primary economic environment in
useful lives. However, leasehold improvements and
which the Company operates) is the Indian Rupee (`).
PPE acquired under finance lease are depreciated
On initial recognition, all foreign currency transactions on a straight-line method over the shorter of their
are recorded at exchange rates prevailing on the date respective useful lives or the tenure of the lease
of the transaction. Monetary assets and liabilities, arrangement. Freehold land is not depreciated.
denominated in a foreign currency, are translated at
Schedule II to the Companies Act, 2013 prescribes
the exchange rate prevailing on the Balance Sheet
the useful lives for various class of assets. For certain
date and the resultant exchange gains or losses are class of assets, based on technical evaluation and
recognised in the Statement of Profit and Loss.
assessment, Management believes that the useful lives
2.5 Property, plant and equipment adopted by it reflects the periods over which these
assets are expected to be used. Accordingly for those
An item of property, plant and equipment is recognised
assets, the useful lives estimated by the management
as an asset if it is probable that the future economic
are different from those prescribed in the Schedule.
benefits associated with the item will flow to the
Company and its cost can be measured reliably. This Management’s estimates of the useful lives for various
class of fixed assets are as given below:
recognition principle is applied to the costs incurred
initially to acquire an item of property, plant and Asset Useful life
equipment and also to costs incurred subsequently to
Salt Works, Water Works, Reservoirs and Pans 1-30 years
add to, replace part of, or service it and subsequently Plant and Machinery 1-60 years
carried at cost less accumulated depreciation and
accumulated impairment losses, if any. Traction Lines and Railway Sidings 15 years
Factory Buildings 5-60 years
The cost of PPE includes interest on borrowings
Other Buildings 5-60 years
directly attributable to the acquisition, construction
Furniture and Fittings and Office Equipment
or production of a qualifying asset. A qualifying asset (including Computers and Data Processing
is an asset that necessarily takes a substantial period Equipment) 1-10 years
of time to be made ready for its intended use or sale. Vehicles 4-10 years
Borrowing costs and other directly attributable cost
Useful lives and residual values of assets are reviewed
are added to the cost of those assets until such time as
at the end of each reporting period.
the assets are substantially ready for their intended use,
which generally coincides with the commissioning Losses arising from the retirement of, and gains or
date of those assets. losses arising from disposal/adjustments of PPE are
recognised in the Statement of Profit and Loss.
The present value of the expected cost for the
decommissioning of an asset after its use is included 2.6 Intangible assets
in the cost of the respective asset if the recognition Intangible assets generally comprise software licenses
criteria for a provision is met. and rights to use railway wagon.
Machinery spares that meet the definition of PPE are Intangible assets are measured on initial recognition
capitalised and depreciated over the useful life of the
at cost and subsequently are carried at cost less
principal item of asset. accumulated amortisation and accumulated
All other repair and maintenance costs, including impairment losses, if any.
regular servicing, are recognised in the Statement The intangible assets with a finite useful life are
of Profit and Loss as incurred. When a replacement amortised using straight line method over their
occurs, the carrying value of the replaced part is de-
estimated useful lives. The management’s estimates of
recognised. Where an item of property, plant and the useful lives for various class of Intangibles are as
equipment comprises major components having given below:
different useful lives, these components are accounted
for as separate items. Asset Useful life
PPE acquired and put to use for projects are capitalised Computer software 5 years
and depreciation thereon is included in the project Rights to use railway wagon 20 years
cost till the project is ready for commissioning.
The estimated useful life is reviewed annually by the
management.

146 Annual Report 2017-18