Finance

2:0. Assets and basis of Valuation

2:1.   Property, Plant and Equipment

2:1:1. Assets

Items of property, plant and equipment are stated at cost or valuation, less accumulated depreciation. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production expenses

The total cost for the training programme, expenditure occurred in research activities sectorial development expenses for Seed plantations have been capitalized and amortized over the period. This presentation is changed, so as to treat it as development expenditure.

The Management of the board has decided to implement the policy as follows;

Since 2015 The Expenditures related to Palmyrah Research activities, plantation and all kind of training programmes are treated as development expenditures, and they are all written off for the respective years in the financial statements.

2:1:2. Subsequent Expenditures 

Expenditures incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalized with the carrying amount of the component being written off. Other subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the item of property, plant and equipment. All other expenditures are recognized in the income statement as an expense as and when incurred.

2:1:3. Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of items of property, plant and equipment. Generally, assets are written off over the following periods.

• Land & Building                            –             10 Years
• Vehicle                                           –             05 Years
• Production Accessories              –            05 Years
• Equipment                                     –             05 Years
• Furniture and Fitting                    –             05 Years
• Lab Accessories                           –            05 Years

2.1.4. Amortization

Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of items of Accounting Software is written off 10 Years periods.

2:2. Inventories   

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of the business, less the estimated cost of completion and selling expenses. The cost of inventories is based on the first-in-first-out (FIFO) principle. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of overhead, based on normal operating capacity.

2:3. Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand and short-term deposits.

3:0. Liabilities and Provisions

3:1. Retirement Benefit Obligations

3:1.1. Defined contribution plans

Liabilities to defined contribution plans, including Employees Provident Fund and Employees Trust Fund, are recognized as expenses in the income statement as and when incurred.  The Board contributes 12% and 3% of gross emoluments of employees-to-Employees Provident Fund and Employees Trust Fund respectively.

3:1.2 Defined Retirement benefit plans

Gratuity is a defined retirement benefit plan.  The Board is liable to pay gratuity in terms of relevant statute.  In order to meet this liability, a provision is carried forward in the balance sheet, based on a half month’s salary of the last month of the financial year of all employees for each completed year of service, commencing from the first year of service. 

However, as per the Gratuities Act No. 12 of 1983, the payment arises only upon completion of 5 years of continue service with the Board. The gratuity liability is neither funded nor actually valued.  This item is grouped under provision and other liabilities in the balance sheet.

3:2.1. Trade and other payables

Trade and other payables are stated at their cost.

3:2.2. Provision for Bad Debts is 5 %.

4:0. Income Statement

1.1. Income

Income is recognized to the extent that it is probable that the economic benefits will flow to the Board and the revenue and associated costs incurred or to be incurred can be reliably measured.  The following specific criteria are used for the purpose of recognition of revenue.

• Local Sales

Income from sale of goods is recognized when the significant risks and records of ownership of the goods have passed to buyer.  Revenue from services rendered is recognized after completion of services.

• Farm Income

Income farm sale of inter croup Palmyrah Related items and farms production items.

• PRI Testing Income.

Income from PRI Testing services provide society, public and provide companies.

1:2. Other Income

• Interest Received

Income from Saving Account Interest

• Profit on Fixed Asset Disposal.

Net gains and losses of a revenue nature on the disposal of property, plant & equipment and other noncurrent assets have been accounted for the income statement, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

Other income is recognized on an accrual basis.

• Tender Deposit Non-Refundable.

Income from Tender Deposit Non-Refundable by Supplier

• Other Received.

Gains and losses arising from incidental activities to main revenue generating activities and those arising from a group of similar transactions which are not material are aggregated, reported and presented on a net basis.

• Trade Promotions

Income from Exhibition, Mobile sales and Other Trade promotions Income.

• Palmyrah Tree Cutting Income.

Income from Public for Palmyrah Tree Planting.

4:2. Expenditure

Expenses are recognized in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income.  All expenditure incurred in the running of the business and in maintaining the property, plant & equipment in a state of efficiency has been charged to income when arriving at the profit / loss for the period.

2. Cash flow

The cash flow of the Board has been presented using the indirect method in accordance with the Sri Lanka.

Sri Lanka Public Sector Accounting Standard 02 – Cash flow statement.

3. Government Grants

Government grants, which are recognized in the financial statements only upon receipt and treated as income for the year.