Company Overview Financial Statements Notice Statutory Reports 53 Rudolf Atul Chemicals Ltd | Annual Report 2023-24 right to terminate a lease without permission from the other party with no more than an insignificant penalty. The lease expense of such short-term leases, low value assets leases and cancellable leases are recognised as an operating expense on a straight-line basis over the term of the lease. At the commencement date, lease liability is measured at the present value of the lease payments to be paid during non-cancellable period of the contract, discounted using the incremental borrowing rate. The right-of-use assets is initially recognised at the amount of the initial measurement of the corresponding lease liability, lease payments made at or before commencement date less any lease incentives received and any initial direct costs. Subsequently, the right-of-use asset is measured at cost less accumulated depreciation and any impairment losses. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using an effective interest rate method) and reducing the carrying amount to reflect the lease payments made. The right-of-use asset and lease liability are also adjusted to reflect lease modifications or revised in-substance fixed lease payments. q) Earnings per share Earnings per share (EPS) is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. To calculate diluted EPS, the net profit for the period attributable to equity shareholders and the weighted average number of equity shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. r) Offsetting financial instruments Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the assets and settle the liabilities simultaneously. s) Critical estimates and judgments Preparation of the Financial Statements require the use of accounting estimates, judgements and assumptions, which by definition, will seldom equal the actual results. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the Financial Statements of the period in which changes are made and, if material, their effects are disclosed in the notes to the Financial Statements. This Note provides an overview of the areas that involve a higher degree of judgements or complexity and of items that are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements are included in the relevant notes together with information about the basis of calculation for each affected line item in the Financial Statements. The areas involving critical estimates or judgments are: i) Estimation for income tax – Note 1 (o) ii) Estimation of defined benefit obligation – Note 1 (m) iii) Fair value measurements - Note 26.6 iv) Estimation of provision for inventories – Note 1 (j) v) Al lowance for credi t losses on trade receivable – Note 1 (g) vi) Estimation of claims | liabilities – Note 1 (n) vii) Impairment – Note 1 (e) t) Dividend Final dividend on shares is recorded as a liability on the date of approval by the shareholders, and interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors.
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