Page 122 - Interloop Annual Report 2018-2019

NOTES TO THE UNCONSOLIDATED NOTES TO THE UNCONSOLIDATED
FINANCIAL STATEMENTS FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019
Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are
expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
i) Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Company classifies its debt instruments:
Amortized cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortized cost. Interest income from these financial assets
is included in other income using the effective interest rate method. Any gain or loss arising on derecognition
is recognized directly in profit or loss and presented in other income / (other expenses) together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit
or loss.
Fair value through other comprehensive income (FVTOCI)
Financial assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured at FVTOCI.
Movements in the carrying amount are taken through other comprehensive income, except for the recognition
of impairment losses (and reversal of impairment losses), interest income and foreign exchange gains and
losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain
or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss and
recognized in other income / (other expenses). Interest income from these financial assets is included in other
income using the effective interest rate method. Foreign exchange gains and losses are presented in other
income/ (other expenses) and impairment losses are presented as separate line item in the statement of profit
or loss.
Fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets
Interloop Limited designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required
to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the
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purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely
payments of principal and interest are classified and measured at fair value through profit or loss, irrespective
of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or
at fair value through OCI, as described above, debt instruments may be designated at fair value through profit
or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value
with net changes in fair value recognized in the statement of profit or loss.
B. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognized when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement;
and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognize the transferred asset to the extent of its continuing
involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Company has
retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Company
could be required to repay.
C. Impairment
The adoption of IFRS 9 has fundamentally changed the Company’s accounting for impairment losses for
financial assets by replacing IAS 39’s incurred loss approach with a forward-looking expected credit loss
(ECL) approach. IFRS 9 requires the Company to record an allowance for ECLs for all loans and other debt 2018 - 19
financial assets not held at FVPL.
Annual Report
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