Page 113 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

– 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.

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 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.

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 statement of 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.

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 statement of profit or loss and presented
in other income / (other operating 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 statement of 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 operating 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 operating 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 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

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