Page 120 - Interloop Annual Report 2018-2019

NOTES TO THE UNCONSOLIDATED NOTES TO THE UNCONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
5.20 Share capital
Ordinary shares are classified as equity and recognized at their face value.
5.21 Dividend
Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s unconsolidated
financial statements in the period in which dividends are approved.
5.22 Segment reporting
Segment reporting is based on the operating (business) segments of the Company. An operating segment is a
component of the Company that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to the transactions with any of the Company’s other components. An
operating segment’s operating results are reviewed regularly by the chief operating decision maker (‘CODM’)
to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available. The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of the Company that makes
the strategic decisions.
Segment results that are reported to the CODM include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Those incomes, expenses, assets, liabilities and other balances which
cannot be allocated to a particular segment on a reasonable basis are reported as unallocated.
Transaction among the business segments are recorded at cost. Inter segment sales and purchases are eliminated
from the total.
5.23 Investment in subsidiary and associate
Investments in subsidiary and associate are recognized at cost less impairment loss, if any. At each balance sheet
date, the recoverable amounts are estimated to determine the extent of impairment losses, if any, and carrying
amounts of investments are adjusted accordingly. Impairment losses are recognized as expense. Where impairment
losses subsequently reverse, the carrying amounts of the investments are increased to the revised recoverable
amounts but limited to the extent of initial cost of investments. A reversal of impairment loss is recognized in the
statement of profit or loss.
The profits and losses of subsidiary and associated entities are carried forward in their financial statements and not
dealt within these financial statements except to the extent of dividend declared by the subsidiary and associate.
Gains and losses on disposal of investments are included in other income.
5.24 Related party transactions
Interloop Limited All transactions with related parties are carried out at agreed terms and conditions and on arm’s length basis.
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FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
6. CHANGES IN ACCOUNTING POLICIES DUE TO APPLICABILITY OF CERTAIN INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
6.1 IFRS 9, ‘Financial Instruments’
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
6.1.1 Financial assets
The standard introduced new classification and measurement models for financial assets. A financial asset shall be
measured at amortized cost if it is held in order to collect contractual cash flows which arise on specified dates and
that are ‘solely payment of principal and interest (SPPI)’ on the principal amount outstanding. A debt investment
shall be measured at fair value through other comprehensive income if it is held in order to collect contractual cash
flows which arise on specified dates that are solely principal and interest and as well as selling the asset on the
basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless
the Company makes an irrevocable election on initial recognition to present gains and losses on equity instruments
in other comprehensive income. Despite these requirements, a financial asset may be irrevocably designated as
measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch.
Key changes in accounting policies resulting from application of IFRS 9
A. Classification and measurement of financial instruments
Investments and other financial assets
Classification:
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through
profit or loss), and
- those to be measured at amortized cost
The classification depends on the Company’s business model for managing the financial assets and the
contractual terms of the cash flows. In order for a financial asset to be classified and measured at amortized
cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is
performed at an instrument level. The Company’s business model for managing financial assets refers to how
it manages its financial assets in order to generate cash flows.
2018 - 19
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model in which Annual Report
the investment is held. For investments in equity instruments, this will depend on whether the Company has
made an irrevocable election at the time of initial recognition to account for the equity investment at fair value
through other comprehensive income. The Company reclassifies debt investments when and only when its
business model for managing those assets changes. 119