Heritage Foods Limited

Heritage Foods Limited 224 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 consolidated 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. d. Fair value measurement The Group measures fi nancial instruments at fair value at each consolidated 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 theprincipalmarket 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 Group. 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 Group 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 consolidated 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 consolidated fi nancial statements on a recurring basis, the Group 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 Group’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 Group’s accounting policies. For this analysis, the management veri fi es themajor inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. For the purpose of fair value disclosures, the Group 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. e. Revenue recognition The Group derives revenues primarily from sale of milk, dairy products and feed 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 Group 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 Group. Revenue is only recognised to the extent that it is highly probable a signi fi cant reversal will not occur. The Group 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.