MICRO ENTITY PRIVATE LIMITED

Statement of Financial Position

As at 31 Ashad 2081 (16 July 2024)
Figures in NPR
Restated Restated
As at As at As at
Notes 31 Ashadh 2081 31 Ashadh 20801 Shrawan 2079

ASSETS
Non-Current Assets
Property, Plant and Equipment 3.1 12,882,333 13,216,906 12,439,456
Intangible Assets 3.2 133,760 71,680 89,600
Investments 3.3 525,000 692,965 692,965
Other Receivables
Total Non-Current Assets 13,541,093 13,981,551 13,222,021
Current Assets
Investments 3.3 6,237,500 5,673,000 4,107,500
Inventories 12,456,895 10,245,365 11,277,386
Trade and other receivables 3.4 23,839,758 20,760,648 24,366,464
Other current assets 3.5 2,778,322 9,682,136 7,310,000
Cash and cash equivalents 3.6 1,722,283 1,282,567 1,134,510
Total Current Assets 47,034,758 47,643,716 48,195,860
Total Assets 60,575,851 61,625,267 61,417,881

EQUITY AND LIABILITIES

Equity
Share Capital 3.7 2,000,000 2,000,000 2,000,000
Retained Earnings 3.8 31,384,630 27,399,054 24,898,462
Total Equity 33,384,630 29,399,054 26,898,462
Liabilities
Non-Current Liabilities
Loans and Borrowings 3.9 3,585,670 4,256,583 1,196,613
Provision for Employee Benefits 3.10 2,849,069 2,753,700 2,679,900
Provisions - -
Total Non-Current Liabilities 6,434,739 7,010,283 3,876,513
Current Liabilities
Loans and Borrowings 3.9 8,992,330 13,437,956 16,975,370
Trade and other payables 3.11 10,330,322 11,315,901 12,932,380
Income Tax Liability 1,433,830 462,073 735,156
Provision for Employee Benefits - - -
Provisions - - -
Total Current Liabilities 20,756,482 25,215,930 30,642,906

Total Liabilities 27,191,220 32,226,213 34,519,419

Total Equity and Liabilities 60,575,851 61,625,267 61,417,881
 MICRO ENTITY PRIVATE LIMITED
Statement of Income
For the Year Ended 31 Ashad 2081 (16 July 2024)
Figures in NPR
Restated
Particulars Notes FY 2080-81 FY 2079-80
Revenue from Operations 3.12 98,469,592 98,869,777
Interest Income - -
Other Income 3.13 296,535 1,824,969
Total Income 98,766,127 100,694,746
Cost of goods sold 3.14 62,387,847 67,244,756
Employee Benefit Expenses 3.15 9,303,806 9,429,568
Administrative Expenses 3.16 6,903,563 5,758,765
Selling and distribution Expenses 3.17 7,548,667 7,210,113
Interest Expenses 3.18 4,042,992 3,874,852
Depreciation and Amortization Expenses 3.1 & 3.2 3,159,845 3,518,826
Other Expenses 3.19 - 150,000
Total Expenses 93,346,721 97,186,881
Profit Before Tax 5,419,406 3,507,865
Income Tax Expense 3.20 1,433,830 1,007,273
Current year 1,433,830 462,073
Previous years - 545,200
Net Profit for the year 3,985,576 2,500,592
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

First time adoption of NAS for ME

Reconciliation of equity as at 1st Shrawan 2079 (date of transition to NAS FOR MEs)
E.N. Local GAAP Adjustment Restated
s balance

ASSETS
Non-Current Assets
Property, Plant and Equipment 1 12,529,056 (89,600) 12,439,456
Intangible Assets 1 - 89,600 89,600
Investments 2 4,205,465 (3,512,500) 692,965
Other Receivables - - -
Total Non-Current Assets 16,734,521 (3,512,500) 13,222,021
Current assets
Investments 2 - 4,107,500 4,107,500
Inventories 11,277,386 - 11,277,386
Trade and other receivables 3 21,909,566 2,456,898 24,366,464
Other current assets 3 9,766,898 (2,456,898) 7,310,000
Cash and cash equivalents 1,134,510 - 1,134,510
Total current assets 44,088,360 4,107,500 48,195,860
Total assets 60,822,881 595,000 61,417,881
EQUITY AND LIABILITIES
Equity
Share Capital 2,000,000 - 2,000,000
Reserves 4 27,479,882 (2,581,419) 24,898,462
Total Equity 29,479,882 (2,581,419) 26,898,462
Liabilities
Non-Current Liabilities
Loans and Borrowings 5 1,396,613 (200,000) 1,196,613
Provision for Employee Benefits 6 - 2,679,900 2,679,900
Provisions - - -
Total Non-Current Liabilities 1,396,613 2,479,900 3,876,513
Current Liabilities
Loans and Borrowings 5 16,775,370 200,000 16,975,370
Trade and other payables 7 12,435,861 496,519 12,932,380
Income Tax Liability 735,156 - 735,156
Provision for Employee Benefits - - -
Provisions - - -
Total Current Liabilities 29,946,387 696,519 30,642,906
Total Liabilities 31,343,000 3,176,419 34,519,419
Total Equity and Liabilities 60,822,881 595,000 61,417,881
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

First time adoption of NAS for ME

Reconciliation of equity as at 31st Ashadh 2080
Note Local GAAP Adjustments Restated balance

ASSETS
Non-Current Assets
Property, Plant and Equipment 1 13,413,086 (196,180) 13,216,906
Intangible assets 1 - 71,680 71,680
Investments 2 4,685,465 (3,992,500) 692,965
Other Receivables - - -
Total Non-Current Assets 18,098,551 (4,117,000) 13,981,551
Current assets
Investments 2 - 5,673,000 5,673,000
Inventories 10,245,365 - 10,245,365
Trade and other receivables 20,760,648 - 20,760,648
Other current assets 9,682,136 - 9,682,136
Cash and cash equivalents 1,282,567 - 1,282,567
Total current assets 41,970,716 5,673,000 47,643,716
Total assets 60,069,267 1,556,000 61,625,267
EQUITY AND LIABILITIES
Equity
Share Capital 2,000,000 - 2,000,000
Reserves 4 28,320,901 (921,847) 27,399,054
Total Equity 30,320,901 (921,847) 29,399,054
Liabilities
Non-Current Liabilities
Loans and Borrowings 5 4,756,583 (500,000) 4,256,583
Provision for Employee Benefits 6 - 2,753,700 2,753,700
Provisions - - -
Total Non-Current Liabilities 4,756,583 2,253,700 7,010,283
Current Liabilities
Loans and Borrowings 5 12,937,956 500,000 13,437,956
Trade and other payables 7 11,591,755 (275,853) 11,315,901
Income Tax Liability 462,073 - 462,073
Provision for Employee Benefits - - -
Provisions - - -
Total Current Liabilities 24,991,784 224,147 25,215,930
Total Liabilities 29,748,366 2,477,847 32,226,213
Total Equity and Liabilities 60,069,267 1,556,000 61,625,267
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR
First time adoption of NAS for ME (continued)
Reconciliation of net profit for the year ended 31st Ashad 2080

Local GAAP Adjustments Restated

balance
Revenue from operations 98,869,777 - 98,869,777
Interest Income - -
Other Income 413,446 1,411,523 1,824,969
Total Income 99,283,223 100,694,746
Cost of goods sold 67,244,756 - 67,244,756
Employee Benefit Expenses - 9,429,568 9,429,568
Administrative Expenses 15,586,382 (9,827,617) 5,758,765
Selling and distribution Expenses 7,210,113 - 7,210,113
Interest Expenses 3,874,852 - 3,874,852
Depreciation and Amortization Expenses 3,518,826 - 3,518,826
Other Expenses - 150,000 150,000
Total Expenses 97,434,930 (248,049) 97,186,881
Profit/(Loss) Before Tax 1,848,292 1,659,573 3,507,865
Income Tax Expense 462,073 545,200 1,007,273
Net Profit/(Loss) for the year 1,386,219 1,114,373 2,500,592
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR
First time adoption of NAS for ME (continued)
Explanatory Notes

EN-1: Property, plant and equipment and intangible assets

As at As at
31 Ashadh 20801 Shrawan 2079
Fixed assets as per GAAP 13,413,086 12,529,056
Intangible assets presented as separate line item (71,680) (89,600)
Repair expense capitalized as per GAAP derecognized (124,500) -
Property, plant and equipment as per NAS 13,216,906 12,439,456

EN-2: Investments
Under GAAP, investment in listed shared were measured at cost. Upon transition to NAS for
ME, they have been classified as "held for trading" and "available for sale". Held for trading
investments have been measured at market price and available for sale investments have
been measured at lower of cost and market price.

EN-3: Trade and other receivables

Insurance claim receivables have been reclassified from "prepaid, advance, loan and
deposits" to "trade and other receivables".

EN-4: Retained Earnings

Various remeasurements upon transition to NAS for ME have been adjusted against retained
earnings as follows:
As at As at
31 Ashadh 20801 Shrawan 2079
Retained Earnings as per GAAP 28,320,901 27,479,882
Remeasurements:
Remeasurement of investment in listed shares 595,000
Provisions for long-term employee benefits recognized (2,679,900)
Exchange difference on foreign currency payables (496,519)
Total remeasurements (2,581,419)
Remeasurements on transition to NAS for ME (2,581,419)
Change in net profits for FY 2079-80 1,659,573
Retained Earnings as per NAS for ME 27,399,054 24,898,462

EN-5: Loans and borrowings

Upon transition to NAS for ME, loans and borrowings have been appropriately reclassified as
"current" and "non-current".

EN-6: Provision for employee benefits

Long-term employee benefits were accounted for as expense on payment basis as per GAAP.
Upon transition to NAS for ME, they have been recognized as liabilities.

EN-7: Trade and other payables

Foreign currency payables were measured at exchange rates at the date of transaction under
GAAP. Upon transition to NAS for ME, they have been translated at closing rates.

EN-8: Net profit for FY 2079-80

Various remeasurements upon transition to NAS for ME have resulted in differences in net
profit for FY 2079-80 as compared to GAAP. The reconciliation has been presented herewith:
Net profit as per GAAP 1,386,219
Add: Gratuity expense as per GAAP 257,000
Less: Gratuity expense as per NAS for ME (235,467)
Add: Leave expense as per GAAP 25,000
Less: Leave expense as per NAS for ME (120,333)
Less: Profit on sale of investment as per GAAP (120,000)
Less: Loss on sale of investment as per NAS (150,000)
Add: Fair value gain on investments 1,355,500
Add: Exchange loss as per GAAP 596,349
Add: Exchange gain as per NAS 176,023
Less: Repair expenses charged to expense (124,500)
Less: previous year tax expense (545,200)
Net profit as per NAS for ME 2,500,592
 MICRO ENTITY PRIVATE LIMITED
Statement of Changes in Equity
For the Year Ended 31 Ashad 2081 (16 July 2024)

Figures in NPR
Other
Particulars Share Capital Share Premium Retained Earnings Total
Reserves
Balance at 1 Shrawan 2079 2,000,000 - 27,479,882 - 29,479,882
Restatements on transition to NAS for MEs - - (2,581,419) - (2,581,419)
Balance at 1 Shrawan 2079 (restated) 2,000,000 - 24,898,462 - 26,898,462
Profit for the year - - 2,500,592 - -
Issue of Shares - - - - -
Dividends to Shareholders - - - - -
Other Changes - - - - -
Balance at 31 Ashad 2080 2,000,000 - 27,399,054 - 26,898,462
Profit for the year
Issue of Shares
Dividends to Shareholders
Other Changes
Balance at 31 Ashad 2081
 MICRO ENTITY PRIVATE LIMITED
Statement of Cash Flows
For the Year Ended 31 Ashad 2081 (16 July 2024)
Figures in NPR
Particulars FY 2080-81 FY 2079-80

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year
Adjustment for:
Depreciation/Impairment on Property, Plant and Equipment
Interest Income
Interest Expense
Loss/(gain) on sale of Property, Plant and Equipment
Income Tax expense charged to statement of income
Working Capital Adjustments
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in Inventories
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions
Increase/(Decrease) in other liabilities
Cash Generated from Operations
Interest paid
Income tax paid
NET CASH FLOWS FROM OPERATING ACTIVITIES (A)

CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from sale of PPE, Investments/Financial Assets
Interest/Dividend received
Acquisition of Property, Plant and Equipment
NET CASH FLOWS FROM INVESTING ACTIVITIES (B)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from the issue of Equity and Preference Share
Proceeds from other non-current borrowings
Repayment of Borrowings
Dividend Paid
NET CASH FLOW FROM FINANCING ACTIVITIES (C)

Net Increase in Cash and Cash Equivalents

Cash and Cash Equivalents at the beginning
Exchange gains/(losses) in cash and cash equivalents
Cash and Cash Equivalents at the end
 MICRO ENTITY PRIVATE LIMITED
Notes to Financial Statements

Figures in NPR

Significant Accounting Policies and Notes to Accounts

1. General information
Give brief information about the legal status, registered address and nature of the business of the company.
The financial statements were authorized to issue by …....... on …........

2. Significant Accounting Policies

2.1 Basis of preparation and accounting policies
2.1.1 Statement of Compliance
These financial statements have been prepared in accordance with Nepal Accounting Standard for Micro
Entities (NAS for MEs).
2.2.2 Basis of Measurement
The financial statements have been prepared on the historical cost basis except investments held-for-trade is
measured at fair value.
2.2.3 Critical Accounting Estimates
The preparation of the financial statemetns in conformity with Nepal Accounting Standards for Micro Entities
(NAS fro MEs) requires the use of certain critical accounting estimates and judgements. The company makes
certain estimates and assumptions regarding the future events. In the future, actual result may differ from
these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a
meterial adjustment to the carrying amounts of assets and liabilities within the next financial year are to be
disclosed.

2.1.4. Functional and Presentation Currency

The financial statements are prepared in Nepalese Rupees, which is the Company's functional currency. All the
financial information presented in Nepalese Rupees has been rounded to the nearest rupee, except otherwise
indicated.

2.2 Accounting Policies

The pricipal accounting policies adopted in the preparation of the financial statements are set out below. The
policies have been consistently applied to all the years presente, unless otherwise stated.

2.2.1 Impairment of non-financial assets (excluding inventories)

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate
that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its
recoverable amount, the asset is written down accordingly.
Impairment charges are included in profit or loss.

2.2.2. Foreign currency

Transactions entered into by company entities in a currency other than the currency of the primary economic
environment in which they operate (the functional currency is NPR) are recorded at the rates ruiling when the
transactions occur. Foreign currency monetary assets and liablities are translated at the rates ruiling at the
reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liablities
are recognized immdediately in profit or loss.

2.2.3. Property, plant and equipment

Items of property, plant and equipment are initially recognized at cost. Cost includes the purchase price and
other directly attributable costs. Subsequently, items of property, plant and equipment are measured at cost
less depreciation less impairment.

2.2.4. Depreciation
Freehold land is not depreciated. Depreciation on assets under construction does not commence until they are
complete and available for use. Depreciation is provided on all other items of property, plant and equipment so
as to write-off their carrying value over the expected useful economic lives.
Depreciation has been computed on SLM/WDV method.

2.2.5. Leased Assets

When all the risks and rewards incidential to the ownership are not transferred to the company (an operating
lease), the total rentals payable under the lease are charged to the statement of income over the lease term.

2.2.6. Investments
Investments in listed shares
Investments in listed shares held for trading are classified as current assets and are stated at quoted market
price as at the date of the statement of financial position with any resultant gain or loss recognized in the
statement of income.
Other investments
Other investments are initially measured at cost and subsequently at lower of cost or market price. The
provision for impairment is recognized in the statement of income.

2.2.7. Trade and other receivables

Trade and other receivables are stated at their cost less provision for impairment. The amount of the provision
is recognized in the income statement.

2.2.8. Inventories
Inventories are initially recognized at cost, and subsequently at the lower of cost and net realisable value.

The cost is determined on first-out-first (FIFO) method or weighted average method and included expenditure
incurred in acquiring the inventories and bringing them to their present location and condition. In the case of
manufactured inventories and work-in-progress, cost includes direct material and labour cost and it does not
include overheads which is charged to the statemnt of income in the period in which it is incurred.

2.2.9. Cash and cash equivalents

Cash and cash equivalents comprises cash balances, call deposits and other short term highly liquid
investments. Bank overdrafts that are repayble on demand and form and integral part of the company's cash
management are included within borrowings in current liabilities on the balance sheet.

2.2.10. Share capital

Financial instruments issued by the company are classified as equity only to the extent that they do not meet
the definition of a financial liability or financial asset the company's equity shares are classified as equity
instruments.
Preference share capital is classified as equity if it is non-redeemable and any dividends are discretionary at
the option of the company. Preference share capital is classified as a liability if it is readable on a specific date
or at the option of the shareholders and dividends thereon is recognised in the income statement as interest
expense

2.2.11. Borrowing costs

Interest bearing borrowings are recognized initially at cost, net of attributable transaction costs. Subsequent to
initial recognition, interest bearing borrowings are stated at amortized cost. Borrowing costs are charged to
the income statement in the period in which it is incurred.

Retirement Benefits
Defined contribution schemes
Benefits payable on contribution scheme is measured and recognized as expenses at the amount that needs
to be contributed (whether or not actually contributed; i.e. on accrual basis) by the company during the
reporting period.
Defined benefit schemes
Benefits payable for defined benefit scheme is measured and recognized as a liablity at the amount that would
be payable at the end of the reporting period, if the employees leave on that date. Employees who have not
completed the minimum period of services to be entitled to the retirement benefit at the end of the reporting
period are not considered in the masurement of the liability.

2.2.13. Taxation
Income tax is the expected tax payable on the taxable income for the year using tax rate at the balance sheet
date and any adjustment to tax payable in respect of previous years.
Additional income taxs that arise from the distribution of dividends are recognised at the same time as the
liability to pay the related dividend.

2.2.14. Government grant/deferred revenue

Government grants receipt for capital expenditure are generally deducted in arriving at the carrying amount of
the asset purchased. Grants for revenue expenditure are netted against the cost incurred by the company.
Where retention of the Government Grant is dependent on the company satisfying certain criteria, it is initially
recognised As deferred income. When the criteria for retention have been satisfied, the different income
balance is released to the statement of income or netted against the asset purchased.

2.2.15. Trade and other payables

Trade and other payables are stated at their cost.

2.2.16. Provisions
The provisions for liabilities of uncertain timing or amount include those for warranty claims, leasehold
dilapidations and legal disputes. The provision is measured at the best estimate of the expenditure required to
settle the obligation at the reporting date.

2.2.17. Income
Revenue
Renenue for the sale of goods or services is recognized when the company has transferred the significnat risks
and rewards of ownership to the buyer and it is probable that the company will receive the previously agreed
upon payment.
Interest income
Interest income are recognized in the statement of income using the effective interest method.
Dividend income
Dividend income is recognized in the income statement when the right to receive payment is established.

2.2.18. Expenses
Operating lease payments
Payments made under operating lease are recognized in the income statement on a straight -line basis over
the term of the lease.
Interest
Interest expenses are recognized in the statement of income using accrual method.
 MICRO ENTITY PRIVATE LIMITED
Notes to Financial Statements
Figures in NPR
3.1 Property, Plant and Equipment
Furniture & Office Plant and
Computer Vehicles Total
Fixtures Equipments Machinery
Cost

Balance at 1 Shrawan 2079 4,198,187 997,212 1,675,861 4,852,796 715,401 12,439,456

-
Additions 2,136,689 1,401,141 740,526 - - 4,278,356
Disposals - - - - - -

Balance at 31 Ashadh 2080 6,334,876 ### 2,416,387 4,852,796 715,401 16,717,813

Additions 245,898 - 84,560 - 2,456,894 2,787,352

Disposals - - - - - -

Balance at 31 Ashad 2081 6,580,774 ### 2,500,947 4,852,796 3,172,295 19,505,165

Accumulated depreciation

Balance at 1 Shrawan 2079 - - - - - -

Charge for the year 1,487,952 454,409 480,676 970,559 107,310 3,500,906
Disposals

Balance at 31 Ashadh 2080 1,487,952 454,409 480,676 970,559 107,310 3,500,906

Charge for the year 1,229,079 485,986 498,813 776,447 131,601 3,121,925
Disposals

Balance at 31 Ashad 2081 2,717,031 940,395 979,489 1,747,006 238,911 6,622,832

Net Book Value

As at 1st Shrawan 2079 4,198,187 997,212 1,675,861 4,852,796 715,401 12,439,456

As at 31st Ashad 2080 4,846,924 ### 1,935,712 3,882,237 608,091 13,216,906

As at 31st Ashadh 2081 3,863,743 ### 1,521,459 3,105,789 2,933,384 12,882,333

Security (if any)

Bank borrowings are secured on all property, plant and equipment of NPR…............ (20XX: NPR…..........)

Property, Plant and Equipment under construciton

which is currently under construction. The cost the buildings will be depreciated once the property in complete and available for
use. The estimated additional cost to completion of the property, and to which the group is contractually committed is NPR .........
 MICRO ENTITY PRIVATE LIMITED
Notes to Financial Statements

Figures in NPR
3.1 Intangible Assets
Software Total
Cost

Balance at 1 Shrawan 2079 89,600 89,600

Additions - -
Disposals - -

Balance at 31 Ashadh 2080 89,600 89,600

Additions 100,000 100,000

Disposals

Balance at 31 Ashadh 2081 189,600 189,600

Accumulated amortization

Balance at 1 Shrawan 2079 - -

Charge for the year 17,920 17,920

Disposals

Balance at 31 Ashadh 2080 17,920 17,920

Charge for the year 37,920 37,920

Disposals

Balance at 31 Ashadh 2081 55,840 55,840

Net Book Value

As at 1st Shrawan 2079 89,600 89,600

As at 31st Ashad 2080 71,680 71,680

As at 31st Ashadh 2081 133,760 133,760

 MICRO ENTITY PRIVATE LIMITED
Notes to Financial Statements

Figures in NPR

3.3 Investment
As at FY
A. Investments Held for Trading 31 Ashadh 2081 31 Ashadh 2080

Balance as at 1 Shrawan 5,673,000 4,107,500

Additions 100,000 2,280,000
Disposals - (2,070,000)
Gain/(loss) on subsequent measurement 464,500 1,355,500

Balance as at 31 Ashadh 6,237,500 5,673,000

As at As at
B. Investments available for sale 31 Ashadh 2081 31 Ashadh 2080

Balance as at 1 Shrawan 692,965 692,965

Additions - -
Disposals - -
Gain/(loss on subsequent measurement (167,965) -

Balance as at 31 Ashadh 525,000 692,965

As at As at As at
C. Total Investments 31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079

Total Investments 6,762,500 6,365,965 4,800,465

Non-current portion 525,000 692,965 692,965

Current portion 6,237,500 5,673,000 4,107,500

As at As at As at
D. Quoted Price of Listed Shares 31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079
Held for trading
NABIL Bank Limited - 690
NIC Asia Bank Ltd 740 -
NMB Bank Ltd 478 445
Sana Kisan Laghubitta 1,012 925
Available for sale
Butwal Power Company Limited 340 380
HIDCL 105 120
res in NPR

hadh 2080

hadh 2080

awan 2079

awan 2079
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

3.4 Trade and Other Receivables As at As at As at

31 Ashadh 208131 Ashadh 20801 Shrawan 2079

Trade receivables 23,839,758 20,760,648 21,909,566

Less: Provision for impairment of trade receivable - - -
Trade receivables- net 23,839,758 20,760,648 21,909,566
Receivables from related parties
Insurance claim receivables - - 2,456,898
23,839,758 20,760,648 24,366,464

Non-current portion - - -
Current portion 23,839,758 20,760,648 24,366,464

Provision for impairment of trade receivables: FY FY

2080-81 2079-80
Balance at the beginning of the year
Provided during the year
Written off during the year
Unused provisions reversed

Balance at the end of the year

3.5 Inventories
As at As at As at
31 Ashadh 208131 Ashadh 20801 Shrawan 2079

Inventories of goods held for resale 12,456,895 10,245,365 11,277,386

12,456,895 10,245,365 11,277,386

3.5 Other current assets

As at As at As at
31 Ashadh 208131 Ashadh 20801 Shrawan 2079

Provision margin for exim code 300,000 300,000 -

Advances to Staff 897,540 754,615 1,568,978
Advance to suppliers 654,898 7,963,728 5,289,400
Rent Security 566,000 566,000 315,000
Security Deposit (Telephone) 4,500 4,500 2,250
Advance tax 355,384 93,293 134,372

2,778,322 9,682,136 7,310,000

3.6 Cash and Cash Equivalents
As at As at As at
31 Ashadh 208131 Ashadh 20801 Shrawan 2079

Cash in hand 213,422 646,936 740,037

Cash at Bank 1,508,861 635,631 394,472

1,722,283 1,282,567 1,134,510

awan 2079

awan 2079

awan 2079
awan 2079
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

3.7 Share Capital

As at As at
31 Ashadh 20801 Shrawan 2079

Authorized
100,000 ordinary shares of NPR 100 each 10,000,000 10,000,000

Ordinary Shares Issued and Fully Paid

Ordinary shares of Rs. 100 each
Ordinary Ordinary
share share capital

As at 1st Shrawan 2079 20,000 2,000,000

Shares issue and paid up

As at 31st Ashad 2080 20,000 2,000,000

Shares issue and paid up

As at 32nd Ashadh 2081 20,000 2,000,000

3.8 Retained Earnings

As at As at
31 Ashadh 2081 31 Ashadh 2080

Opening balance 27,399,054 24,898,462

Net profit for the year 3,985,576 2,500,592
Dividend paid - -
Closing balance 31,384,630 27,399,054
awan 2079

hadh 2080
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

3.9 Loans and Borrowings

As at As at As at
31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079
Total Loans and Borrowings
Trust Receipt Loan 2,546,580 7,638,460 10,151,000
Vehicle Loan 3,985,670 4,756,583 1,396,613
Overdraft 6,045,750 5,299,496 6,624,370

12,578,000 17,694,539 18,171,983

Non-current loans and borrowings 3,585,670 4,256,583 1,196,613

Current loans and borrowings 8,992,330 13,437,956 16,975,370
3.10 Provision for Employee Benefits

As at As at As at
31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079

Provision for Gratuity 2,263,880 2,254,467 2,276,000

Provision for Leave benefits 585,189 499,233 403,900
2,849,069 2,753,700 2,679,900

3.11 Trade and other payables

As at As at As at
31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079
Trade Payables 2,645,897 309,486 2,233,824
Expenses payable - 2,097,936 1,918,186
Letter of Credit Payable 7,461,300 8,711,480 8,583,370
Audit Fee Payable 223,125 197,000 197,000

10,330,322 11,315,901 12,932,380

3.12 Income tax liability

As at As at As at
31 Ashadh 2081 31 Ashadh 2080 1 Shrawan 2079

Provision for tax 1,433,830 462,073 735,156

1,433,830 462,073 735,156

 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

3.12 Revenue from Operations

FY 2080-81 FY 2079-80
Sale of goods 98,469,592 98,869,777
Rendering of services

98,469,592 98,869,777

3.13 Other income

FY 2080-81 FY 2079-80
Commission and incentive - 293,446
Fair value gain on listed investments 296,535 1,355,500
Exchange gain - 176,023

296,535 1,824,969

3.14 Cost of Goods Sold

FY 2080-81 FY 2079-80
Balance on 1 Shrawan 10,245,365 11,277,386
Purchase during the period 64,599,377 66,212,735
Less: Balance on 31 Ashadh (12,456,895) (10,245,365)

62,387,847 67,244,756

3.15 Employee Benefit Expenses

FY 2080-81 FY 2079-80
Salary & Allowances 7,550,027 7,816,355
Dashain Expenses 525,870 482,902
Staff Welfare 789,540 774,511
Gratuity expense 334,413 235,467
Leave Expense 103,955 120,333

9,303,806 9,429,568

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, including the directors.

FY 2080-81 FY 2079-80
Salary
Other long-term benefits
Total pension and other post-employment benefit costs
Compensations for loss of office
 Share based payment expense

- -

3.16 Administrative Expenses

FY 2080-81 FY 2079-80
Audit Fee 265,801 200,000
Bank charge 135,540 412,845
Electricity and water 334,397 221,648
Fine & Penalty 65,840 -
Insurance 1,603,441 805,020
Telephone and Internet 850,450 849,155
Postage and Courier Expenses 116,021 116,021
Office Expenses 436,663 377,837
Printing & Stationary 848,540 825,190
Rates & Taxes 28,794 27,472
Rent Expenses 1,481,940 1,273,476
Repair and maintenance 375,000 650,100
Exchange loss 361,136 -

6,903,563 5,758,765

3.17 Selling and Distribution Expenses

FY 2080-81 FY 2079-80

Advertisement 639,095 319,382

Business Promotion Expenses 275,420 541,372
Sales Incentive /Promotion 1,045,291 745,519
Freight Outward 3,567,381 3,628,284
Guest Entertainment Expenses 392,560 379,980
Loading & Unloading 55,600 50,506
Repackaging Expenses 105,870 101,472
DA & Travelling Expenses 721,560 718,649
Vehicle Running Expenses 745,890 724,950

7,548,667 7,210,113

3.18 Interest expenses

FY 2080-81 FY 2079-80

Interest expense 4,042,992 3,874,852

4,042,992 3,874,852
 MICRO ENTITY PRIVATE LIMITED

Notes to Financial Statements

Figures in NPR

3.19 Other Expenses

FY 2080-81 FY 2079-80
Loss on sale of investments 150,000

- 150,000

3.20 Tax Expenses

FY 2080-81 FY 2079-80
Tax on profit for the year 1,433,830 462,073
Previous year tax - 545,200

1,433,830 1,007,273

Reconciliation of book profits and taxable profits

FY 2080-81 FY 2079-80
Profit before tax as per books 5,419,406 3,507,865
Add: Depreciation as per books 3,159,845 3,518,826
Less: Depreciation as per tax (3,303,318) (3,518,826)
Add: Disallowed repairs 103,243 124,500
Add: Gratuity expense as per books 334,413 235,467
Less: Gratuity paid (325,000) (257,000)
Add: Leave expense as per books 103,955 120,333
Less: Leave paid (18,000) (25,000)
Less: Fair value gain on investments (296,535) (1,355,500)
Add: Exchange loss/(gain) as per books 361,136 (176,023)
Add: Realized exchange gain/(loss) 130,333 (596,349)
Add: Difference in profit on sale of investment - 270,000
Add: Disallowed expenses 65,840 -
Taxable profit 5,735,319 1,848,292
Income tax expense @ 25% 1,433,830 462,073
Reconciliation of Retained Earnings as at 1 Shrawan 2078

Retained Earnings as per GAAP: 27,479,882

Add: Fair value adjustment of investments 595,000
Less: Provision for gratuity (2,276,000)
Less: Provision for leave (403,900)
Less: Exchange gain/loss on FC Payables (496,519)
Retained Earnings (restated) 24,898,462

Reconciliation of Net Profits for FY 2079-80

Net profit as per GAAP 1,386,219
Add: Gratuity expense as per GAAP 257,000
Less: Gratuity expense as per NAS for ME (235,467)
Add: Leave expense as per GAAP 25,000
Less: Leave expense as per NAS for ME (120,333)
Less: Profit on sale of investment as per GAA (120,000)
Less: Loss on sale of investment as per NAS (150,000)
Add: Fair value gain on investments 1,355,500
Add: Exchange loss as per GAAP 596,349
Add: Exchange gain as per NAS 176,023
Less: Repair expenses charged to expense (124,500)
Less: previous year tax expense (545,200)
Net profit as per NAS for ME 2,500,592
CALCULATION OF TAXABLE INCOME

Profit before tax as per books 5,419,406

Add: Depreciation as per books 3,159,845
Less: Depreciation as per tax (3,303,318)
Add: Disallowed repairs 103,243
Add: Gratuity expense as per books 334,413
Less: Gratuity paid (325,000)
Add: Leave expense as per books 103,955
Less: Leave paid (18,000)
Less: Fair value gain on investments (296,535)
Add: Exchange loss as per books 361,136
Add: Realized exchange gain 130,333
Add: Disallowed expenses 65,840
Taxable profit 5,735,319
Income tax expense @ 25% 1,433,830
 Trial Balance as on 31 Ashadh 2081

Closing Balance
Particulars Debit Credit
Property, Plant and Equipment
Furniture and Fixtures 5,217,322
Computer 1,943,943
Office Equipments 2,020,272
Motors & Vehicles 3,588,361
Motorcycles 293,875
Generator 399,257
Other Assets 2,665,727
Intangible Assets 171,680
Opening Inventory 10,245,365
Trade Receivables 23,839,758
Provision margin for exim code 300,000
Advances to Staff 897,540
Investment 4,785,465
Advance to Suppliers 654,898
Rent Security 566,000
Security Deposit (Telephone) 4,500
Cash in hand 213,422
Cash at Bank 1,508,861
Share Capital 2,000,000
Retained Earning 28,320,901
Trust Receipt Loan 2,546,580
Vehicle Loan 3,985,670
Trade Payables 2,645,897
Letter of Credit Payable (USD 55,000) 7,245,684
Overdraft 6,045,750
Audit Fee Payable 223,125
Advance Income Tax 355,384
Revenue from Operations 98,469,592
Purchase 64,599,377
Audit Fee 265,801
Bank Charge 135,540
Salary & Allowances 8,075,897
Electricity & Water 334,397
Sales promotion expense 275,420
Incentives 225,600
Fine & Penalty 65,840
Insurance 1,603,441
Telephone and Internet 850,450
Guest Entertainment Expenses 392,560
Loading and Unloading 55,600
Repacking expenses 105,870
Travelling expenses 721,560
Vehicle Running Expenses 745,890
Postage and Courier Expenses 116,021
Office Expenses 436,663
Printing & Stationary 848,540
Rates & Taxes 28,794
Rent Expenses 1,481,940
Staff Welfare 789,540
Advertisement 639,095
Sales Commission 819,691
Freight Outward 3,567,381
Repair and maintenance 375,000
Finance Cost 4,042,992
Exchange Gain - 130,333
Gratuity Expense 325,000
Leave Expenses 18,000
TOTAL ### ### -

Closing Stock 12,456,895

 MICRO ENTITY PRIVATE LIMITED
Notes to Financial Statements

Figures in NPR

3.21. Changes in Accounting Policies (If any)

In the current financial year the company changes in accounting policies. This change has been accounted for by
restating comparatives and adjusting the opening balance of retained earnings at 01 Shrawan 20XX. The changes
in accounting policy, when applied consistently to 20X1 had the follwoing impact: On Opening Retained Earnings;
On Net Profit.

3.18. Contingencies
The company has contingent liabilities in respect of bank and other guarantees and other matters arising in the
ordinary course of business. It is not anticipated that any material liablitites will arise from the contingent
liabilities.

3.19. Related Party Transactions

Identity of related parties
The company is controlled by (name of the parent company) which owns xx percent of the company's shares. The
remaining xx percent shares are widely held. The ultimate parent company of the company is (name of the
ultimate parent company) incorporated in (name of the country)
The following transactions were carried out with related parties (Give details)
Directors of the company and their immediate relatives control xx percent of the voting shares of the company.
Loans to directors amounting to NRs xx (20XX: NRs xx) are included in "other receivables". No interest is payable
by the directors (for disclose if interest is payable)
In additiona to their salaries, the company also provides non-cash benefits to directors and executive officers, and
contributes to a post-employment defined benefit plan on their behalf.

During the year ended ...... Ashadh 20X2, associates purchased goods from the group in the amount of NRs......
NRs xx (20XX: NRs xx) and at ….... Ashadh 20XX associates owed the company NRs xx (20XX: NRs xx).
Transactions with associates are priced on an arm's length basis. During the year ended …..... Ashadh 20XX the
company repaid a loan of NRs xx received from one of its associates. No dividends were received from associates
in 20XX or in 20XX.

3.20. Current/Non-current Assets and Liabilities

Current assets are expected to be realized within the normal operating cycle of the entity or within twelve months
after the reporting period or are intended for sale or consumption within the normal operating cycle of the entity
or are held primarily for the prupose of trading or are cash and cash equivalents. All other assets are classified as
Non-current assets.
Current liabilities are expected to be settled in the entity's normal operating cycle or are primarily held for trading
or are due to be settled within a period of twelve months after the reporting period. All other liabilities are
classified as non-current liabilities.

3.21. Prior period errors

Prior period errors are ommissions or misstatements in an entity's financial statements. Such ommissions may
relate to one or more prior periods. Correction of an error is done by calculating the cumulative effect of the
change on the financial statements of the period as if new method or estimate had always been used for all the
affected prior years' financial statements. Sometimes, such changes may not be practicable, in such cases it is
applied to the latest period possible by making corresponding adjustment to the opening balance of the period.