Abbreviated Company Accounts - ELECTRAWELD LIMITED

1Accounting Policies

Basis of measurement and preparation of accounts
Basis of preparing the financial statements
The company meets its day to day working capital requirements through a bank overdraft facility which is repayable on demand. The director expects this facility to continue for the foreseeable future and therefore considers it appropriate to prepare the financial statements on the going concern basis. The financial statements do not include any adjustment that would result from a withdrawal of the overdraft facility by the company's bankers.

Accounting convention
The financial statements have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008).

Turnover policy
Turnover represents the value, net of value added tax and discounts, relating to the sale and hire of welding equipment.

Tangible assets depreciation policy
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Improvements to property - over remaining term of lease
Plant and machinery - 15% on reducing balance
Fixtures and fittings - 15% on reducing balance
Motor vehicles - 25% on reducing balance
Computer equipment - 25% on cost

Intangible assets amortisation policy
Goodwill, being the amount paid in connection with the purchase of the business is fully amortised.

Valuation information and policy
Stocks
Stock is valued at the lower of cost and net realisable value using the FIFO standard method, after making due allowance for obsolete and slow moving items.

Other accounting policies
Deferred tax
Deferred tax has been considered in respect of all timing differences that have originated but no provision is required at the balance sheet date.

Hire purchase and leasing commitments
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to the profit and loss account over the relevant period. The capital element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to the profit and loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the profit and loss account in the period to which they relate.

Going concern
The director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus he continue to adopt the going concern basis of accounting in preparing the annual financial statements.

6Transactions with directors