Page 195 - Interloop Annual Report 2018-2019

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Amortized cost
The Company has transferred its rights to receive cash flows from the asset or has assumed an
Financial assets that are held for collection of contractual cash flows where those cash flows obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-
represent solely payments of principal and interest are measured at amortized cost. Interest income through’ arrangement; and either (a) the Company has transferred substantially all the risks and
from these financial assets is included in other income using the effective interest rate method. Any rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the
gain or loss arising on derecognition is recognized directly in profit or loss and presented in other risks and rewards of the asset, but has transferred control of the asset.
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. 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
Fair value through other comprehensive income (FVTOCI) rewards of ownership.

Financial assets that are held for collection of contractual cash flows and for selling the financial When it has neither transferred nor retained substantially all of the risks and rewards of the asset,
assets, where the assets’ cash flows represent solely payments of principal and interest, are nor transferred control of the asset, the Company continues to recognize the transferred asset to
measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive the extent of its continuing involvement. In that case, the Company also recognizes an associated
income, except for the recognition of impairment losses (and reversal of impairment losses), liability. The transferred asset and the associated liability are measured on a basis that reflects the
interest income and foreign exchange gains and losses which are recognized in profit or loss. rights and obligations that the Company has retained.
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 Continuing involvement that takes the form of a guarantee over the transferred asset is measured
income / (other expenses). Interest income from these financial assets is included in other income at the lower of the original carrying amount of the asset and the maximum amount of consideration
using the effective interest rate method. Foreign exchange gains and losses are presented in that the Company could be required to repay.
other income/ (other expenses) and impairment losses are presented as separate line item in the
statement of profit or loss. C. Impairment

Fair value through profit or loss 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
Financial assets at fair value through profit or loss include financial assets held for trading, financial expected credit loss (ECL) approach. IFRS 9 requires the Company to record an allowance for
assets designated upon initial recognition at fair value through profit or loss, or financial assets ECLs for all loans and other debt financial assets not held at FVPL.
mandatorily required to be measured at fair value. Financial assets are classified as held for trading
if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets ECLs are based on the difference between the contractual cash flows due in accordance with
with cash flows that are not solely payments of principal and interest are classified and measured the contract and all the cash flows that the Company expects to receive. The shortfall is then
at fair value through profit or loss, irrespective of the business model. Not with standing the criteria discounted at an approximation to the asset’s original effective interest rate.
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 For trade and other receivables, the Company has applied the standard’s simplified approach
if doing so eliminates, or significantly reduces, an accounting mismatch. and has calculated ECLs based on lifetime expected credit losses. The Company has established
a provision matrix that is based on the Company’s historical credit loss experience, adjusted for
Financial assets at fair value through profit or loss are carried in the statement of financial position forward-looking factors specific to the debtors and the economic environment. However, in certain
at fair value with net changes in fair value recognized in the statement of profit or loss. cases, the Company may also consider a financial asset to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding contractual amounts
B. Derecognition in full before taking into account any credit enhancements held by the Company.

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar D. Hedge accounting
financial assets) is primarily derecognized when: 2018 - 19
Interloop Limited The rights to receive cash flows from the asset have expired, or IFRS 9 requires that hedge accounting relationships are aligned with its risk management objectives Annual Report

and strategy and to apply a more qualitative and forward-looking approach to assessing hedge
effectiveness.

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