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Atul Ltd | Annual Report 2017-18
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 Effective Interest Rate (‘EIR’) method less impairment, if any. The result of EIR amortisation and the loss arising
from impairment, if any, are recognised in the Statement of Profit and Loss.
Measured at fair value through Other Comprehensive Income:
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 Other Comprehensive Income (OCI).
Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and
Loss. On derecognition, cumulative gain or loss previously recognised in Other Comprehensive Income ( 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 Group subsequently measures all investments in equity instruments at fair value. The Management of the Group has
elected to present fair value gains and losses on its investment equity instruments 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 the Statement of Profit and Loss as other income when the right to
receive payment is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately
from other changes in fair value.
Impairment of financial assets:
The Group 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.
For trade receivables only, the Group 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.
Derecognition:
A financial asset is derecognised only when the Group:
i)
has transferred the rights to receive cash flows from the financial asset (or the rights to cash flows from the asset expire)
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.
Where the entity has transferred an asset, the Group evaluates whether it has transferred substantially all risks and rewards
of ownership of the financial asset. In such cases, the financial asset is derecognised through the Statement of Profit and
Loss or Other Comprehensive Income as applicable. Where the entity has not transferred substantially all risks and rewards
of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial
asset, the financial asset is derecognised if the Group has not retained control of the financial asset. Where the Group retains control
of the financial asset, the asset continues to be recognised to the extent of continuing involvement in the financial asset.
r) Financial liabilities:
i)
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
ii) Initial recognition and measurement
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially measured at fair value.
Note 1 Significant Accounting Policies
(continued)
Notes
to the Consolidated Financial Statements