Page 172 - BCML AR 2019-20

FINANCIAL STATEMENTS

Notes forming part of the Standalone Financial Statements

Note No. : 2 Significant accounting policies (contd.)

Equity investments
Equity investments in the scope of Ind AS - 109 are measured at fair value except for investment in associates which are carried at cost.
The Company makes an election to present changes in fair value either through OCI or through profit or loss on an instrument-by-
instrument basis. The classification is made on initial recognition and is irrevocable.
If Company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are
recognized in OCI. Profit or loss arising on sale thereof is also taken to OCI and the amount accumulated in this respect is transferred
within the Equity.
(c) De-recognition
Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset.
Financial liabilities
(a) Initial recognition and measurement
The financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, derivative financial
instruments, etc.
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of
financial liabilities (other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial liabilities, as appropriate, on initial recognition.
(b) Subsequent measurement
For subsequent measurement, financial liabilities are classified into two categories:

(i) Financial liabilities at amortized cost, and
(ii) Derivative instruments at fair value through profit or loss (FVTPL).
Financial liabilities at amortized cost
After initial recognition, financial liabilities are subsequently measured at amortized cost using the EIR method. Gains and losses are
recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Discount or premium on acquisition and fees or costs forms an integral part of the EIR.
(c) De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

Derivative financial instruments
Initial recognition and subsequent measurement
A derivative financial instrument, such as foreign exchange forward contracts are used to hedge foreign currency risks. Such derivative
financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any
gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.

170 | Balrampur Chini Mills Limited