Atul Ltd Annual Report 2016-17

Atul Ltd | Annual Report 2016-17

Note 1 Significant Accounting Policies

(continued)

Subsequent measurement:

After initial recognition, financial assets are measured at:

Fair value {either through Other Comprehensive Income (FVOCI) or through profit or loss (FVPL)} or,

ii) Amortised cost

Debt instruments:

Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and

the cash flow characteristics of the asset. There are 3 measurement categories into which the Company classifies its debt

instruments:

Measured at amortised cost:

Financial assets that are held within a business model whose objective is to hold financial assets in order to collect

contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost

using the EIR method less impairment, if any, the amortisation of EIR and loss arising from impairment, if any is recognised

in the Statement of Profit and Loss.

Measured at fair value through Other Comprehensive Income (OCI):

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and

collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value

through Other Comprehensive Income. Fair value movements are recognised in the OCI. Interest income measured using the

EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On de-recognition, cumulative

gain | (loss) previously recognised in OCI is reclassified from the equity to other income in the Statement of Profit and Loss.

Measured at fair value through profit or loss:

A financial asset not classified as either amortised cost or FVOCI, is classified as FVPL. Such financial assets are measured at

fair value with all changes in fair value, including interest income and dividend income if any, recognised as other income

in the Statement of Profit and Loss.

Equity instruments:

The Company subsequently measures all investments in equity instruments other than subsidiary companies, associate

company and joint venture company at fair value. The Management of the Company has elected to present fair value gains

and losses on such equity investments in Other Comprehensive Income, and there is no subsequent reclassification of these

fair value gains and losses to the Statement of Profit and Loss. Dividends from such investments continue to be recognised

in profit or loss as other income when the right to receive payment is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit

and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported

separately from other changes in fair value.

Investments in subsidiary companies, associate company and joint venture company:

Investments in subsidiary companies, associate company and joint venture company are carried at cost less accumulated

impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed

and written down immediately to its recoverable amount. On disposal of investments in subsidiary companies, associate

company and joint venture company, the difference between net disposal proceeds and the carrying amounts are recognised

in the Statement of Profit and Loss.

Impairment of financial assets:

The Company assesses on a forward looking basis the expected credit losses associated with its financial assets carried at

amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been

a significant increase in credit risk. Note 27.8 details how the Company determines whether there has been a significant

increase in credit risk.

For trade and lease receivable only, the Company applies the simplified approach permitted by Ind AS 109 Financial

Instruments, which requires expected lifetime losses to be recognised from initial recognition of such receivables.

De-recognition:

A financial asset is de-recognised only when the Company

has transferred the rights to receive cash flows from the financial asset or

ii) retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to

pay the cash flows to one or more recipients.

Notes

to the Financial Statements