Heritage Foods Limited

FINANCIAL STATEMENTS Consolidated 29 th Annual Report 2020-21 | 225 The Group 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 Group 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 consolidated statement of pro fi t and loss. Dividend Income Dividend income is recognized when the Group’s right to receive dividend is established. f. 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 consolidated 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 value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to fi nancial liabilities. g. Taxes Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax is recognised in the consolidated statement of pro fi t and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the Balance Sheet approach on temporary di ff erences between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary di ff erences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, a ff ects neither the accounting pro fi t nor taxable pro fi t or loss. Deferred tax assets are recognised for all deductible temporary di ff erences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable pro fi t will be available against which the deductible temporary di ff erences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the deductible temporary di ff erence arises from the initial recognition of