• All contractual terms of the fi nancial instrument (including prepayment, extension, call and similar options) over the expected life of the fi nancial 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 standalone statement of profi t and loss. This amount is refl ected under the head ‘other expenses’ in the standalone statement of profi t and loss. The standalone balance sheet presentation for various fi nancial instruments is described below: • 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 standalone balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the company does not reduce impairment allowance from the gross carrying amount. • Financial guarantee contracts: ECL is presented as a provision in the standalone balance sheet, i.e. as a liability. Financial liabilities Initial recognition and measurement Financial liabilities are classifi ed, at initial recognition, as fi nancial liabilities at fair value through profi 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 Company’s fi nancial liabilities include trade and other payables, loans and borrowings including fi nancial guarantee contracts and derivative fi nancial instruments. Subsequent measurement The measurement of fi nancial liabilities depends on their classifi cation, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the standalone statement of profit and loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to the standalone statement of profit and loss. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the standalone statement of profit and loss. The company has not designated any financial liability as at fair value through profit 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 standalone statement of profi 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 standalone statement of profi 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 specifi 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 Heritage Foods Limited | 31st Annual report 2022-23 204
RkJQdWJsaXNoZXIy NTE5NzY=