paid, the defi cit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the standalone balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to a reduction in future payment. Gratuity: The Company operates a defi ned benefi t gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefi ts under the defi ned benefi t plan is determined using the projected unit credit method. Remeasurements, comprising mainly of actuarial gains and losses, are recognised immediately in the standalone balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassifi ed to the standalone statement of profi t and loss in subsequent periods. Leave Encashment: The Company operates a longterm leave encashment plan in India. Accrued liability for leave encashment including sick leave is determined on actuarial valuation basis using Projected Unit Credit (PUC) Method at the end of the year and provided completely in profi t and loss account as per Ind AS - 19 “Employee Benefi ts”. q. Financial instruments A fi nancial instrument is any contract that gives rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument of another entity. Financial assets Initial recognition and measurement All fi nancial assets, excluding trade receivables are recognised initially at fair value plus, in the case of fi nancial assets not recorded at fair value through profi t or loss, transaction costs that are attributable to the acquisition of the fi nancial asset. Trade receivables that do not contain a signifi cant fi nancing component are measured at transaction price. Subsequent measurement For purposes of subsequent measurement, fi nancial assets are classifi ed in four categories: • Debt instruments at amortised cost • Debt instruments at fair value through other comprehensive income (FVTOCI) • Debt instruments, derivatives and equity instruments at fair value through profi t or loss (FVTPL) • Equity instruments measured at FVTOCI and FVTPL Debt instruments at amortised cost A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met: a) The asset is held within a business model, whose objective is to hold assets for collecting contractual cash fl ows, and b) Contractual terms of the asset give rise on specifi ed dates to cash fl ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such fi nancial assets are subsequently measured at amortised cost using the eff ective interest rate (EIR) method. 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 in fi nance income in the standalone statement of profi t and loss. The losses arising from impairment are recognised in the standalone statement of profi t and loss. Debt instrument at FVTOCI A ‘debt instrument’ is classifi 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 included within 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 reclassifi ed from the equity to standalone statement of profi 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 classifi ed as at FVTPL. Heritage Foods Limited | 31st Annual report 2022-23 202
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