Depreciation

Hero MotoCorp Limited follows the Straight line method of depreciation which just spreads out
the cost of an asset equally over its lifetime. The rates used to calculate depreciation value is
charged on a pro-rata basis as prescribed in Schedule XIV to the Companies Act, 1956. The book
value or carrying amount of asset is then original cost less the accumulated depreciations. Asset
costing up to Rs. 5000 are depreciation 100% in the year they are purchased. Intangible assets,
amortized over a period of five years and some licenses are depreciated for 42 months. It is a
way to recover the cost (or other basis) of certain types of property as it decreases the taxable
income. Depreciation is non-cash charge which reduce net income but are not paid out in cash, so
it is added back to net income when calculating net cash ow.
Particular\year
2014
2013
2012
Profit Before depreciation
3974.62
3670.95
3962.05
Depreciation value
1107.37
1141.75
1097.34
Profit after depreciation
2867.25
2529.2
2864.71
*All figures is Rs. Crores and at the end of financial year that is March 31st of every year.

Inventory
Company follows GAAPs (Generally accepted accounting principles) for valuing inventory, so
as to not overstate or understate the value of inventory goods. Raw materials and components,
stores and spares, loose tools, finished goods and work in progress are valued at cost or net
realizable value, whichever is lower. Net realizable value is generally selling price less selling
cost and the basis of determining cost for various categories of inventories are as follows:Stores and spares, loose tools, raw materials and components - Weighted average cost
Materials in transit - Actual cost
Work in progress and finished goods- Material cost plus appropriate share of labor,
manufacturing overheads and excise duty
Particular\year
2014
Raw materials and components
371.49
Goods in transit
74.37
Stores and spares
62.37
Lose tools
14.22
Finished goods
110.91
Work in progress
36.19
Total inventory
669.55
Inventories values affect a lot of things in a business.

2013
368.68
42.59
55.51
14.26
125.22
30.51
636.76

2012
396.52
28.69
43.66
13.52
158.70
38.48
675.57

Revenue Recognition
Company physically verifies tall the inventories at regular interval and maintains all the
inventories in record. Company follows most accurate method of GAAPs (Generally accepted
accounting principles) for revenue recognition that is Sales basis Method Under the sales-basis
method, revenue is recognized at the time of sale, which is defined as the moment when the title

of the goods or services is transferred to the buyer. Vehicle sales are recorded when title and
risks and rewards of ownership have passed, which is generally when a vehicle is released to the
carrier responsible for transporting it to a dealer and when collectability is reasonably assured
The sale can be made for cash or credit. This means that, under this method, revenue is not
recognized even if cash is received before the transaction is complete.