Page 169 - Arvind 2024

Corporate Overview Statutory Reports Financial Statements
Notes to Standalone Financial Statements for the year ended 31st March, 2024 (Amount in Rs. Lac, unless stated otherwise)
revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
(a) Judgements
In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:
Evaluation of indicators for impairment of Investment in Subsidiaries and Joint Ventures:
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
(b) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
Inventory is stated at the lower of cost and net realizable value (NRV).
NRV for completed inventory property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the company, based on comparable transactions identified by the company for properties in the same geographical market serving the same real estate segment.
NRV in respect of inventory property under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and an estimate of the time value of money to the date of completion.
With respect to Land advance given, the net recoverable value is based on the present value of future cash flows, which depends on the estimate of, among other things, the likelihood that a project will be completed, the expected date of completion, the discount rate used and the estimation of sale prices and construction costs.
The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
a) Identification of performance obligation
Revenue consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated/ interdependent. In assessing whether performance obligations relating to sale of undivided share of land and constructed area are highly interrelated/ interdependent, the Company considers factors such as:
ƒ Whether the customer could benefit from the undivided share of land or the constructed area on its own or together with other resources readily available to the customer.
ƒ Whether the entity will be able to fulfil its promise under the contract to transfer the undivided share of land without transfer of constructed area or transfer the constructed area without transfer of undivided share of land.
b) Timing of satisfaction of performance obligation
Revenue from sale of real estate units is recognised when (or as) control of such units is transferred to the customer.
For contracts where control is transferred at a point in time, the Company considers the following indicators of the transfer of control of the asset to the customer:
When the entity obtains a present right to payment for the asset.
Annual Report 2023-24 | 167