Page 252 - BCML AR 2019-20

FINANCIAL STATEMENTS

Notes forming part of the Consolidated Financial Statements

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

(b) Subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
(i) At amortized cost,
(ii) At fair value through other comprehensive income (FVTOCI), and
(iii) At fair value through profit or loss (FVTPL).
Financial assets at amortized cost
A ‘financial asset’ is measured at the amortized cost if both the following conditions are met:
(i) The asset is held within a business model whose objective is to hold the asset for collecting contractual cash flows, and
(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Amortized cost is determined using the Effective Interest Rate (“EIR”) method. Discount or premium on acquisition and fees or
costs forms an integral part of the EIR.
Financial assets at fair value through other comprehensive income (FVOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held both for
collection of contractual cash flows and for selling the financial assets and contractual terms of the financial assets give rise to
cash flows representing solely payments of principal and interest.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are not classified in any of the categories above are fair value through profit or loss.
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).

250 | Balrampur Chini Mills Limited