Heritage Foods Limited

Heritage Foods Limited 162 valuation by agreeing the information in the valuation computation to contracts and other relevant documents. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. d. Revenue recognition The Company derives revenues primarily from sale of milk and dairy products. It is also engaged in generation of power and trading of dairy and food commodities. Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that re fl ects the consideration the Company expects to receive in exchange for those products or services. Revenue is measured on the basis of contracted price, after deduction of any discounts and any taxes or duties collected on behalf of the Government such as goods and services tax, etc. Discounts are recognised in accordance with the schemes implemented by the Company. Revenue is only recognised to the extent that it is highly probable a signi fi cant reversal will not occur. The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the time value of money. The Company satis fi es a performance obligation and recognises revenue over time, if one of the following criteria is met: • The customer simultaneously receives and consumes the bene fi ts provided by the Company’s performance as the Company performs; or • The Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or • The Company’s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date. For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satis fi ed. Revenue from sale of products and services is recognised at the time when performance obligation is satis fi ed. Interest Income For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the e ff ective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the fi nancial instrument or a shorter period, where appropriate, to the gross carrying amount of the fi nancial asset or to the amortised cost of a fi nancial liability. When calculating the e ff ective interest rate, the Company estimates the expected cash fl ows by considering all the contractual terms of the fi nancial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included under other income in the standalone statement of pro fi t and loss. Dividend Income Dividend income is recognized when the Company’s right to receive dividend is established. e. Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset. On receipt of grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to the standalone statement of pro fi t and loss over the expected useful life in a pattern of consumption of the bene fi t of the underlying asset i.e. by equal annual instalments. When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the e ff ect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the di ff erence between the initial carrying