Heritage Foods Limited

FINANCIAL STATEMENTS Standalone 29 th Annual Report 2020-21 | 167 • Raw material - Cost has been ascertained on weighted average cost method. • Finished goods - Cost has been ascertained on weighted average cost method. • Stores, spares and consumables - Cost has been ascertained on FIFO basis. • Work in progress - Cost has been ascertained on weighted average cost method basis. • Tradable goods - Cost has been ascertained on moving weighted average basis. • Packaging material - Cost has been ascertained on FIFO basis. Costof inventoriescomprisesof thefollowing: • Raw material, stores, spares, consumable stores and packaging material: Cost includes purchase price, import duties and other taxes excluding taxes those are subsequently recoverable from the concerned authorities, freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. • Finished goods and work in progress: Cost comprises cost of direct material, direct labour and appropriate proportion of variable and fi xed overhead expenditure, the latter being allocated on the basis of normal operating capacity, but excluding borrowing costs. • Tradable goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. n. Impairment of non- fi nancial assets The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash in fl ows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses of continuing operations, including impairment on inventories, are recognised in the standalone statement of pro fi t and loss. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. o. Provision and contingencies Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an out fl ow of resources embodying economic bene fi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the standalone statement of pro fi t and loss net of any reimbursement. If the e ff ect of the time value of money is material, provisions are discounted using a current pre-tax rate that re fl ects, when appropriate, the risks speci fi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost. Contingencies Contingent liabilities are identi fi ed and disclosed with respect to following: • a possible obligation that arises from past events and whose existence will be con fi rmed only by