Download - Colgate palmolive (india) limited
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COLAGATE PAMOLIVE INDIA LTD
ANNUAL REPORT 2002-2003
INTANGIBLE ASSETS
Intangible
assets
As at
31-03-02
As at
31-03-03
upto
31-03-02
For the
year
Upto
31-03-03
As at
31-03-03
As at
31-03-02
Goodwill &
Trademarks
2729.81 2729.81 511.84 68.24 580.08 2149.73 2217.97
Copyrights
& Design
1352.90 1352.90 724.77 96.63 821.40 531.50 628.13
Technical
know-how
4983.70 4983.70 1779.89 237.32 2017.21 2966.49 3203.81
TOTAL 9066.41 9066.41 3016.50 402.19 3418.69 5647.72 6049.91
Gross block Amortisation Net block
Rs Lacs
Useful life
Goodwill and trademarks- 40 yrs
Copyrights and design -14 yrs
Technical know-how 21 yrs
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After implementation of AS 26
Gross block Amortisation Net block
Intangibl
e assets
As at
31-03-03
As at
31-03-04
upto
31-03-03
For
theyear
Adjustme
nt
Upto
31-03-04
As at
31-03-04
As at
31-03-032729
Goodwill &
Trademark
s
2729.8
1
2729.81 580.08 119.4
3
1893.81 2593.32 136.49 2149.73
Copyrights
& Design
1352.9
0
1352.90 821.40 106.3
1
357.55 1285.26 67.64 531.50
Technical
know-how
4983.7
0
4983.70 2017.21 302.5
8
2414.72 4734.51 249.19 2966.49
TOTAL 9066.4
1
9066.41 3418.69 528.3
2
4666.08 8613.09 453.32 5647.72
A/c to the useful life of intangible assets is 10 yrs
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ACCOUNTING STANDARD 26
Accounting Standard (AS) 26, Intangible Assets,
issued by the Council of the Institute of Chartered
Accountants of India, comes into effect in respect
of expenditure incurred on intangible items duringaccounting periods commencing on or after 1-4-
2003 .
It has a presumption that useful life of intangible
assets is unlikely to exceed 10 yrs
It dealt with no. of situations of amortisation period
of intangible assets.
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Given case: Amortisation perioddetermined under paragraph 63 has notexpired and the amortisation periodbefore A S 26 > after implementation ofAS 26 (10 yrs).
1.ANALYSIS OF ANNUAL REPORT WITH
RESEPCT TO AS 26
The useful life of each tangible assets changes
to 10 yrs in compliance to A S 26.
As per A S 26, the Colgate Palmolive ltd has
restated the carrying amt of intangible assetsstarting from 2003-04 (financial yr) and thedifference between the net value at the end ofpreceding years ; amortisation for the year andcarrying amount for at the end of the year
( adjustment)
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As per A S 26 carrying amt is amortised over theremaining years after the change in the useful life .
FOR GOODWILL & TRADEMARKS
Carrying amt = [used life *Gross
Gross value _ value of asset]
of asset
10=2729.81- (9.5*2729.81)
10
=136.49
Adjustment= net value at the end of preceding years -amortisation for the year carrying amount for at the endof the year
=2149.73 - 119.43 - 136.49
=1893.81
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Carrying amt of 136.49 would be amortised over 0.5
yrs which is the balance of the amortisation period.
Ans 2
Adjustment justified because the useful life of assets
were more without AS 26 and hence deduction in
their value is essential as carrying value has
reduced.
No , because if the adjustments are entered as
expense in the p/l account , the company will
report tremendous increase in losses. Thus wecan say that loss is overstated and profit is
understated.
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Ans 3
The presumption of 10 yrs is fairer asthe given intangible assets actually
have their useful life as short as 10yrs
due to change in technology andobsolesce coming into play.
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Ans 4 It shows effect on P/L statement. As
amortisation after AS 26 is increased ,
expense increases and profit decreases.
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Ans 5
Amortisation in the year 2003-04 amounts to be
528.32 because of the shortening of the useful life
which impacts the amount of amortisation.
Under SLM , amortisation for 10 years =272.96
[( 68.24 * 40)/10]
Thus it means that the method followed for
amortisation is not SLM.
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Ans 6
No adjustments would have been required as ithe
asset would have been amortised for 10 yrs from
the very starting . Hence no abnormal fluctuation
in the net value of the asset .
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THANKS