associate at cost in accordance with the option available in Ind AS 27, ‘Separate Financial Statements’. w. Research and Development Expenditure on research activities is recognised in the Standalone Statement of Profi t and Loss as incurred. Development expenditure is capitalised as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefi ts are probable, and the Company intends to and has suff icient resources to complete the development and to use or sell the asset. Otherwise, it is recognised in the Standalone Statement of Profi t and Loss as incurred. Subsequent to the initial recognition, the asset is measured at cost less accumulated amortisation and accumulated impairment losses, if any. x. Business Combinations Business combinations are accounted for using the acquisition method. At the acquisition date, identifi able assets acquired and liabilities assumed are measured at fair value. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition date fair values irrespective of the fact that outfl ow of resources embodying economic benefi ts is not probable. The consideration transferred is measured at fair value at acquisition date and includes the fair value of any contingent consideration. Contingent consideration (earn out) is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognised in the Statement of Profi t and Loss. However, deferred tax asset or liability and any liability or asset relating to employee benefi t arrangements arising from a business combination are measured and recognised in accordance with the requirements of Ind AS 12, Income Taxes and Ind AS 19, Employee Benefi ts, respectively. Where the consideration transferred exceeds the fair value of the net identifi able assets acquired and liabilities assumed, the excess is recorded as goodwill. Alternatively, in case of a bargain purchase wherein the consideration transferred is lower than the fair value of the net identifi able assets acquired and liabilities assumed, the Company after assessing fair value of all identifi ed assets and liabilities, record the diff erence as a gain in other comprehensive income and accumulate the gain in equity as capital reserve. The costs of acquisition excluding those relating to issue of equity or debt securities are charged to the Statement of Profi t and Loss in the period in which they are incurred. In case of business combinations involving entities under common control, the above policy does not apply. Business combinations involving entities under common control are accounted by using the pooling of interests method. The net assets of the transferor entity or business are accounted at their carrying amounts on the date of the acquisition subject to necessary adjustments required to harmonise accounting policies. Any excess or shortfall of the consideration paid over the share capital of transferor entity or business is recognised as capital reserve under equity. 4. Key accounting estimates, judgements and assumptions The preparation of the Company’s standalone fi nancial statements requires management to make judgements, estimates and assumptions that aff ect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities aff ected in future periods. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year, are described below. a. Defined benefit plans and other long-term benefit plan The cost and present value of the defi ned benefi t gratuity plan and leave encashment (other long-term benefi t plan) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may diff er from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defi ned benefi t obligation and other longterm benefi ts are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. b. Useful lives of depreciable and amortisable assets Management reviews the useful lives of depreciable and amortisable assets at each reporting date, based on the expected utility of the assets to the Company. c. Leases Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with Heritage Foods Limited | 31st Annual report 2022-23 206
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