Heritage Foods Limited

FINANCIAL STATEMENTS Standalone 29 th Annual Report 2020-21 | 165 Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic bene fi t is expected from their disposal. The di ff erence between the net disposal proceeds and the carrying amount of the asset is recognised in the standalone statement of pro fi t and loss in the period of de-recognition. i. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is re fl ected in the standalone statement of pro fi t and loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either fi nite or inde fi nite. Intangible assets with fi nite lives are amortised on straight line basis over the estimated useful economic life. The amortisation expense on intangible assets with fi nite life is recognised in the standalone statement of pro fi t and loss. The estimated useful life of intangible assets is mentioned below: Asset Useful life (years) Brand 5 Non-compete 3 Procurement 5 Computer software 5 Distribution network 5 Intangible assets with fi nite lives areassessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a fi nite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic bene fi ts embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with fi nite lives is recognised in the standalone statement of pro fi t and loss unless such expenditure forms part of carrying value of another asset. Intangible assets with inde fi nite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of inde fi nite life is reviewed annually to determine whether the inde fi nite life continues to be supportable. If not, the change in useful life from inde fi nite to fi nite is made on a prospective basis. Gains or losses arising fromde-recognition of an intangible asset are measured as the di ff erence between the net disposal proceeds and the carrying amount of the asset and are recognised in the standalone statement of pro fi t and loss when the asset is derecognised. j. Borrowing cost Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. k. Leases E ff ective 1 April 2019, the Company adopted Ind AS 116, Leases, using the modi fi ed retrospective application method. On transition, the adoption of the new standard resulted in recognition of ‘Right of Use’ asset of ₹ 67.49 and a lease liability of ₹ 71.41. The cumulative e ff ect of applying the standard, amounting to ₹ 2.94 was debited to retained earnings, net of taxes. The Company as a lessee The Company’s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identi fi ed asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identi fi ed asset, the Company assesses whether: (i) the contract involves the use of an identi fi ed asset (ii) the Company has substantially all of the economic bene fi ts from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.