Accounting Policies of Inventurus Knowledge Solutions Ltd. Company

Mar 31, 2025

2.1 Material accounting policies

This note provides a list of material accounting policies
adopted in the preparation of these financial statements.
These policies have been consistently applied to all the
periods presented, unless otherwise stated.

2.1.1 Revenue recognition

The Company offers a tech enabled healthcare provider
enablement platform to US-based healthcare organizations
which includes diversified and unique solutions spanning
the healthcare value chain that helps US-based healthcare
providers operate more effectively and efficiently. This
includes services where the Company assists the healthcare
providers such as hospitals to manage their collection from
insurance companies and other services such as managing
clinical workflow of physicians. The Company also licences
the software to the Customers.

Certain contracts include both licensing of software along
with services. In such cases, the Company evaluates the
nature of its promises to the customers within the context
of the contract and accordingly identifies performance
obligations. Such factors includes an assessment of whether
these promises are highly interrelated or interdependent,
whether the promises significantly modify or customize
each other or whether the promises represent a bundle
of services that represent combined output for which the
customer has contracted.

In case of fixed price contracts, where the contracts include
multiple performance obligations, the transaction price will
be allocated to each performance obligation based on the
stand- alone selling prices.

Revenue from term software licensing contracts is
recognized at a point in time when the Company grants
the license to the customer. Control is transferred to the
customer as soon as the license is granted.

Revenue on time-and-material based contracts are
recognized over the period of time as the related services
are performed. Revenue is recognised either over a period
of time as services are provided to customers or at a point in
time when the performance obligation is completed, under
the respective Statement of Works (SOWs) executed with

each customer for each service. The revenue recorded
reflects the payment that the Company expects to receive
in exchange for the services provided. Each SOW defines
and details the components of services to be delivered and
respective billing mechanisms (which could vary from per
person per month fee, a percentage of net collections, per
customer per month etc). Certain contracts exist where the
period between the transfer of the promised services to the
customer and payment by the customer exceeds one year.
In such cases, the Company adjusts the transaction price
for the time value of money.

If the consideration in a contract includes a variable amount,
the Company estimates the amount of consideration to
which it will be entitled in exchange for transferring the
services to the customer. The variable consideration is
estimated at contract inception and constrained until it
is highly probable that a significant revenue reversal in
the amount of cumulative revenue recognised will not
occur when the associated uncertainty with the variable
consideration is subsequently resolved. The Company
allocates the elements of variable considerations to all
the performance obligations of the contract unless there
is observable evidence that they pertain to one or more
distinct performance obligations.

Unbilled revenue, presented within trade receivables has
been recognized considering contractual terms wherein
the Company has an unconditional right to consideration
before it invoices to customers.

In the case of fixed-price contracts, the customer pays the
fixed amount based on a payment schedule. If the services
rendered by the Company exceed the payment, a contract
asset is recognised. If the payments exceed the services
rendered, a contract liability is recognised.

2.1.2 Income taxes

The income tax expense or credit for the year is the tax
payable on the current year’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses, if any.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company
operates and generate taxable income. Management
periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation
is subject to interpretation and considers whether it is
probable that a taxation authority will accept an uncertain
tax treatment. The Company measures its tax balances
either based on the most likely amount or the expected
value, depending on which method provides a better
prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the financial statements. Deferred income tax is also
not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting profit nor taxable profit (tax loss).
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by
the end of the reporting period and are expected to apply
when the related deferred income tax asset is realised or
the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.

For operations carried out in Special Economic Zones,
deferred tax assets or liabilities, if any, have been
established for the tax consequences of those temporary
differences between the carrying values of assets and
liabilities and their respective tax bases that reverse after
the tax holiday period expires.

Deferred tax assets include Minimum Alternative Tax (MAT)
paid in accordance with the tax laws in India, which gives
rise to future economic benefits in the form of availability
of set off against future income tax liability. Accordingly,
MAT is recognised as deferred tax asset in the balance sheet
when the asset can be measured reliably and it is probable
that the future economic benefit associated with the asset
will be realised.

Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.

Deferred tax liabilities are not recognised for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries where the company is able
to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.

Deferred tax assets are not recognised for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries where it is not probable
that the differences will reverse in the foreseeable future
and taxable profit will not be available against which the
temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

2.1.3 Impairment

Non-financial assets
Tangible and intangible assets

Intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in the
circumstances indicate that they might be impaired.

Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs of disposal
and value in use. For the purposes of assessing impairment,
assets are compared at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or group
of assets (cash-generating units). Non-financial assets that
suffered an impairment are reviewed for possible reversal
of the impairment at the end of each reporting period.

2.1.4 Leases

Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased
asset is available for use by the Company. Contracts
may contain both lease and non-lease components. The
Company allocate the consideration in the contract to the
lease and non-lease components based on their relative
standalone prices.

Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include
the net present value of the following lease payments.

a) fixed payments (including in -substance fixed
payments), less any lease incentives receivable

b) variable lease payment that are based on an index or
a rate, initially measured using index or rate as at the
commencement date.

c) amount expected to be payable by the Company
under residual value guarantees.

d) the exercise price of a purchase option if the Company

is reasonably certain to exercise the option and
payments of penalties for terminating the lease,
if the lease term reflects the Company exercising
that options.

Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability. The lease payments are discounted using
the interest rate implicit the lease. If the rate cannot be
readily determined, which is generally the case for leases
in the Company, the lessee’s incremental borrowing rate is
used, being the rate that the individual lessee would have
to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in similar economic
environment with similar terms, security and conditions.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for
each period.

To determine the incremental borrowing rate, the Company

’where possible, uses recent third party financing received by the
individual lessee as a starting point, adjusted to reflect changes in
financing conditions since third party financing was received

’uses a build up approach that starts with a risk free interest rate
adjusted for credit risk for leases held by the Company, which does
not have recent third party financing and

’makes adjustment specific to the lease, e.g. term, country, currency
and security.

Right-of-use assets are measured at cost comprising
the following

’the amount of the initial measurement of lease liability

^’any lease payments made at or before the commencement date
less any lease incentives received.

’any initial direct costs and restoration cost

Lease liability is remeasured at an incremental borrowing
rate and a corresponding adjustment is made to the carrying
amount of Right of Use asset.

Right-of-use assets are generally depreciated over the
shorter of the asset’s useful life and the lease term on
straight-line basis. If the Company is reasonably certain
to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.

Payment associated with short-term leases of equipment
and all leases of low-value assets are recognised on straight¬
line basis as an expenses in profit or loss. Short term leases
with a lease term of 12 months or less. Low value assets
comprise IT equipment and small items of office furniture.

2.1.5 Investment in subsidiary

Investment in subsidiary which is of equity in nature is
carried at cost less impairment, if any.

2.1.6 Property, plant and equipment

Depreciation methods, estimated useful lives and
residual value

Depreciation is calculated using the straight-line method
to allocate their cost, net of their residual values, over their
estimated useful lives as follows:

Assets costing ^5,000 or less are fully depreciated in the
year of purchase.

The Company uses technical evaluation for determining the
useful life of assets, which are different than those specified
by Schedule II of the Companies Act, 2013, in order to
reflect the actual usage of the assets. The useful life,
residual value and the depreciation method are reviewed
at least at each financial year end. The residual values are
not more than 5% of the original cost of the asset.

An item of PPE is derecognised upon disposal or when no
future economic benefits are expected to arise from the
continued use of the assets. Any gain or loss arising on
derecognition is determined as the difference between
the sales proceeds and the carrying amount of the assets
and is recognised in profit or loss. Depreciation on assets
purchased / disposed off during the year is provided on
pro rata basis with reference to the date of additions
/ deductions.

2.1.7 Intangible assets

Amortisation Method and Periods

Amortisation is calculated using the straight-line method
to allocate their cost, net of their residual values, over their
estimated useful lives as follows: