Page 114 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

if they are acquired for the 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 Company record an allowance for a forward-looking expected credit loss (ECL) approach for all
loans and other debt financial assets not held at FVPL.

ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Company expects to receive. The shortfall is then discounted
at an approximation to the asset’s original effective interest rate.

For trade and other receivables, the Company has applied the standard’s simplified approach
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
forward-looking factors specific to the debtors and the economic environment. However, in certain
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
in full before taking into account any credit enhancements held by the Company.

D. Derivative financial instruments
Derivatives are initially recognized at fair value. Any directly attributable transaction costs are
recognized in the statement of profit or loss as incurred. They are subsequently remeasured at fair
value, with all gains or losses, realized and unrealized, recognized in the statement of profit or loss.

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