Colgate palmolive (india) limited

8/7/2019 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

Colgate palmolive (india) limited

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