Page 195 - Kolte Patil AR 2019-20

Notes forming part of the Consolidated Financial Statements

credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time
expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
ii. Non-financial assets
Property, Plant & Equipment and Intangible assets (PPE&IA)
At each Balance Sheet date, the reviews of the carrying amounts of its PPE&IA to determine whether there is any indication that
those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value in
use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal
are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of
money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the Statement of Profit and Loss
as and when they arise.
U. Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognised when the Group has a present obligation as a result of past events and it is probable that an outflow
of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding
retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle
the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements but are
disclosed.

V. Operating Cycle:
Based on the nature of products / activities of the Group and the normal time between acquisition of assets and their realisation in
cash or cash equivalents, the Group has determined its operating cycle as 12 months for the purpose of classification of its assets and
liabilities as current and non-current.
W. Financial Instruments:
Initial recognition
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised in profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all
fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to
hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-
measurement recognised in profit or loss

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