Heritage Foods Limited

FINANCIAL STATEMENTS Consolidated 29 th Annual Report 2020-21 | 233 instrument. However, in rare cases when the expected life of the fi nancial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the fi nancial instrument. • Cash fl ows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the consolidated statement of pro fi t and loss. This amount is re fl ected under the head ‘other expenses’ in the consolidated statement of pro fi t and loss. Financial assets measured at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the consolidated balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-o ff criteria, the Group does not reduce impairment allowance from the gross carrying amount. Financial liabilities Initial recognition and measurement Financial liabilities are classi fi ed, at initial recognition, as fi nancial liabilities at fair value through pro fi t or loss, loans and borrowings or payables, as appropriate. All fi nancial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s fi nancial liabilities include trade and other payables, loans and borrowings including derivative fi nancial instruments. Subsequent measurement The measurement of fi nancial liabilities depends on their classi fi cation, as described below: Financial liabilities at fair value through pro fi t or loss Financial liabilities at fair value through pro fi t or loss include fi nancial liabilities held for trading and fi nancial liabilities designated upon initial recognition as at fair value through pro fi t or loss. Financial liabilities are classi fi ed as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative fi nancial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as de fi ned by Ind AS 109. Separated embedded derivatives are also classi fi ed as held for trading unless they are designated as e ff ective hedging instruments. Gains or losses on liabilities held for trading are recognised in the consolidated statement of pro fi t and loss. Financial liabilities designated upon initial recognition at fair value through pro fi t or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satis fi ed. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the consolidated statement of pro fi t and loss. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the consolidated statement of pro fi t and loss. The Group has not designated any fi nancial liability as at fair value through pro fi t and loss. Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the consolidated statement of pro fi t and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is 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 as fi nance costs in the consolidated statement of pro fi t and loss. This category generally applies to borrowings from banks. Financial guarantee contracts Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the speci fi ed debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of fi nancial year which are unpaid. The amounts are unsecured and are usually paid as per agreed terms. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value