Heritage Foods Limited

FINANCIAL STATEMENTS Standalone 29 th Annual Report 2020-21 | 161 Transactions in foreign currency are initially recorded at exchange rates prevailing on the date of transactions. Monetary items denominated in foreign currencies (such as cash, receivables, payables etc.) outstanding at the end of reporting period, are translated at the functional currency spot rate of exchange at the reporting date. Exchange di ff erences arising on settlement or translation of monetary items are recognised in the standalone statement of pro fi t and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation di ff erences on items whose fair value gain or loss is recognised in OCI or pro fi t or loss are also recognised in OCI or pro fi t or loss, respectively). Any gains or losses arising due to di ff erences in exchange rates at the time of translation or settlement are accounted for in the standalone statement of pro fi t and loss either under the head foreign exchange fl uctuation or interest cost, as the case may be, except those relating to long-term foreign currency monetary items. c. Fair value measurement The Company measures fi nancial instruments at fair value at each standalone balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • In the principal market for the asset or liability, or • In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Company uses valuation techniques that are appropriate in the circumstances and for which su ffi cient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the standalone fi nancial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is signi fi cant to the fair value measurement as a whole: • Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities • Level 2 - Valuation techniques for which the lowest level input that is signi fi cant to the fair value measurement is directly or indirectly observable • Level 3 - Valuation techniques for which the lowest level input that is signi fi cant to the fair value measurement is unobservable For assets and liabilities that are recognised in the standalone fi nancial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is signi fi cant to the fair value measurement as a whole) at the end of each reporting period. The Company’s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted fi nancial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operations. External valuers are involved for valuation of signi fi cant assets, such as unquoted fi nancial assets, and signi fi cant liabilities, such as contingent consideration. Involvement of external valuers is decided upon annually by the management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company’s accounting policies. For this analysis, the management veri fi es themajor inputs applied in the latest