~ FU-WANG FOODS LTD. | Notes to the Financial Statements 2.0 24 22 23 Significant Accounting Policies and Basis of preparation of financial Statements : Statement of Compliance The preparation of financial statements and disclosures of information have been made in accordance with the requirements of the Companies Act 1994, The Securities and Exchange Rules 1987, and International Accounting Standards (IASs) adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) as Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs) and other applicable laws and regulations. The accounting standards that underpin the policies adopted by the company can be found in the following places of the notes to the financial statements : SL.No. ‘Applicable Accounting Standards Note reference 01 IASIBAS - 1 24 02. IASIBAS - 2 2.10 03. IAS/BAS -7 2.13 &2.14 o4. IAS/BAS - 10 2.27 | 05 IASIBAS - 12 247 | 06 IASIBAS - 16 28 | 07 IASIBAS - 18 2.19 | 08 IAS/BAS - 19 2.26 | 09. IAS/BAS - 21 2.20 10. IAS/BAS - 24 2.21 | 1. IAS/BAS - 33, 2.24 | 12. IASIBAS - 36 2.25 | 13. IAS/BAS - 37 25.00 | Basis of Preparation The financial statements have been prepared based on the accrual basis of accounting following going concern assumption and prepared under the historical cost convention. Basis of Reporting The financial statements are prepared and presented for external users by the enterprise in accordance with identified reporting framework. Presentation has been made in compliance with the standards adopted by the ICAB for reporting, BAS 1 Presentation of Financial Statements. i, Reporting Period Financial statements of the company cover one financial year from 01 July 2015 to 30 June 2016. ii, Going Concern There is no significant doubt upon the company’s ability to continue as a going concern. Financial Year 2015-16 | 35 _— —~< FU-WANG FOODS LTD. | Notes to the Financial Statements 24 25 2.6 36 | Financial Year 2015-16 ‘Components of the Financial Statements : According to the BAS-1 “Presentation of Financial Statements", the complete set of Financial Statements includes the following components. (i) Statement of Financial Position as at 30 June 2016; (ii) Statement of Profit or Loss & Other Comprehensive Income for the year ended 30 June 2016; (iii) | Statement of Cash Flows for the year ended 30 June 2016; (iv) Statement of Changes in Shareholders Equity for the year ended 30 June 2016; and (v) Accounting policies and Explanatory notes for the year ended 30 June 2016. Accounting Estimates Preparation of the financial statements requires Management to make judgments, estimates and assumptions that affect the reported amount of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual result could differ from estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of the accounting estimates are recognized in the period in which the estimates are revised. Significant areas requiring the use of Management estimates in these financial statements relate to the useful life of depreciable assets and valuation of inventories. However, assumptions and judgments made by Management in the application of accounting policies that have significant effect on the financial statements are not expected the result in material adjustment to the carrying mounts of assets and liabilities in the next year. Risk and Uncertainty for Use of Estimates The preparation of financial statements in conformity with Bangladesh Accounting Standards requires Management to make estimates and assumptions that affect the reported amounts of revenues and expenses, assets and liabilities, and disclosure requirements for contingent assets and liabilities furring and the date of the financial statements. These financial statements contained information about the assumptions it made about the future and other major sources of estimation uncertainty at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amount of assets, liabilities, income and expenses within the next financial year. In accordance with the guidelines as prescribed by BAS 37: Provisions, Contingent Liabilities and Contingent Assets, provisions are recognized in the following situations: i. When the company has an obligation as a result of past events; ii, When it is provable that an outflow of resources embodying economic benefits will be required to settle the obligation; and iii, Reliable estimate can be made of the amount of the obligation. _— —~< FU-WANG FOODS LTD. | Notesto the Financial Statements 27 28 29 2.10 21 Consistency In accordance with the BFRS framework for the presentation of financial statements together with BAS-1 and BAS-8, the Company applies the accounting disclosure principles consistently from one period to the next. Where selecting and applying new accounting policies, changes in accounting policies applied, correction of errors, amounts involved are accounted for and disclosed retrospectively in accordance with the requirement of BAS-8. Recognition of Property, Plant & Equipment and Depreciation Property, Plant and Equipment are stated at their cost (Fair value for Building & other construction) less accumulated depreciation in accordance with IAS-16 as adopted by ICAB as BAS-16 “Property, Plant and Equipment”. Cost represents cost of acquisition or construction and capitalization of pre-production expenditure including interest during construction periods. No depreciation is charged on land and land development. Depreciation has been charged on additions from the date of ready for use. Depreciation on all other fixed assets is computed using the diminishing balance method in amounts sufficient to write off depreciable assets over their estimated useful economic lives. Expenditure of maintenance and repairs are expensed; major replacement, renewals and betterments are capitalized. The annual depreciation rates to the principal categories are : Categories of fixed assets. Rate of Depreciation Factory building and other construction 2.50% to 5% Plant and machinery 5% Office equipment 20% Furniture and Fixtures 10% Motor vehicles 10% Other assets 10% to 20% Retirement and Disposals An asset is recognized on disposal or when no future economic benefits are expected from its use and subsequent disposal. Gain or loss arising from the retirement or disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the assets and is recognized as gain or loss from disposal of asset under the head other income / (loss) in the comprehensive income statement. Inventories Inventories comprise raw material, finished goods and packing materials which are stated at the lower of cost and net realisable value on consistent basis in accordance with IAS 2 as adopted by ICAB as BAS-2 “Inventories’, Net realisable value is based on estimated selling price less any further costs expected to be incurred for completion and disposal Trade and Other Receivables This is considered good and collectible and therefore, no amount was written off as bad debt and no debt was considered doubtful to provide for. Financial Year 2015-16 | 37 _— —