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Atul Ltd | Annual Report 2016-17
Subsequent measurement:
After initial recognition, financial assets are measured at:
i)
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 Group for managing the asset and
the cash flow characteristics of the asset. There are 3 measurement categories into which the Group 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:
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. 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 Other Comprehensive Income 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.
De-recognition:
A financial asset is de-recognised only when the Group
i)
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.
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 de-recognised. Where the entity has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised.
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 de-recognised if the Group has not retained control of the financial asset. Where the
Group retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement
in the financial asset.
Note 1 Significant Accounting Policies
(continued)
Notes
to the Consolidated Financial Statements