3 Accounting policies
Basis of preparation
The financial statements
have been prepared on the historical cost basis.
The financial statements
are prepared in sterling, which is the functional currency of the company. Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the provision and installation of lighting equipment in the ordinary course of the company's activities. Turnover is shown net of value added tax, returns, rebates and discounts.
Research and development
Expenditure on pure and applied research has been written off in the period for which it was incurred through the profit and loss account.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation.
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Fixtures and fittings | 25% reducing balance |
Motor vehicles | 25% reducing balance |
Office equipment | 25% reducing balance |
Stocks
Stocks of lighting equipment and consumables are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined on the first-in, first-out (FIFO) method. Cost includes the purchase price, including taxes and duties and transport and handling directly attributable to bringing the inventory to its present location and condition. Government grants
Government grants are assistance by government in the form of a transfer of resources to an entity in return for past or future compliance with specified conditions relating to the operating activities of the entity. Grants are recognised in the profit and loss account at the date they are received, under the performance model.
Defined contribution pension plan
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Foreign currencies
Transactions in foreign currencies are recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the closing rates at the balance sheet date. All exchange differences are included in the profit and loss account.