Heritage Foods Limited

FINANCIAL STATEMENTS Standalone 29 th Annual Report 2020-21 | 169 calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in fi nance income in the standalone statement of pro fi t and loss. The losses arising from impairment are recognised in the standalone statement of pro fi t and loss. Debt instrument at FVTOCI A ‘debt instrument’ is classi fi ed as at the FVTOCI if both of the following criteria are met: a) The objective of the business model is achieved both by collecting contractual cash fl ows and selling the fi nancial assets, and b) The asset’s contractual cash fl ows represent SPPI. Debt instruments includedwithin the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is reclassi fi ed from the equity to standalone statement of pro fi t and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method. Debt instrument at FVTPL FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classi fi ed as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the standalone statement of pro fi t and loss. Equity instruments All equity investments in scope of IndAS 109 are measured at fair value. Equity instruments which are held for trading are classi fi ed as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classi fi cation is made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to standalone statement of pro fi t and loss, even on sale of investment. However, the Company transfers the cumulative gain or loss within equity. De-recognition A fi nancial asset is primarily derecognised when: • The rights to receive cash fl ows from the asset have expired, or • The Company has transferred its rights to receive cash fl ows from the asset or has assumed an obligation to pay the received cash fl ows in full without material delay to a third party under a ‘pass- through’ arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its rights to receive cash fl ows from an asset or has entered into a pass- through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognise the transferred asset to the extent of the company’s continuing involvement. In that case, the company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that re fl ects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay. Impairment of fi nancial assets In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following fi nancial assets and credit risk exposure: • Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balances • Financial guarantee contracts which are not measured as at FVTPL • Lease receivables under Ind AS 116