Page 258 - Tata_Chemicals_yearly-reports-2019-20

Statement of profit and loss. When the financial asset Where the group transfers an asset, it evaluates whether
is derecognised, the cumulative gain or loss previously it has transferred substantially all risks and rewards of
recognised in oCI is reclassified from equity to the ownership of the financial asset. Where the group has
Consolidated Statement of profit and loss. Interest transferred substantially all risks and rewards of ownership,
income from these financial assets is included in other the financial asset is derecognised. Where the group
income using the eIr. has not transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset is not
• Fair value through profit or loss (“FVTPL”) derecognised. Where the group has neither transferred
assets that do not meet the criteria for amortised a financial asset nor retained substantially all risks and
cost or FVtoCI are measured at FVtpl. a gain or rewards of ownership of the financial asset, the financial
loss on a debt investment that is subsequently asset is derecognised if the group has not retained control
measured at FVtpl (unhedged) is recognised net in of the financial asset. Where the group retains control of
the Consolidated Statement of profit and loss in the the financial asset, the asset is continued to be recognised
period in which it arises. Interest income from these to the extent of continuing involvement in the financial
financial assets is included in other income. asset.

Equity instruments 2.15.2 Debt and equity instruments
the group subsequently measures all equity investments at debt and equity instruments are classified as either
fair value. Where the group’s management has elected to financial liabilities or as equity in accordance with the
present fair value gains and losses on equity investments in substance of the contractual arrangement.
oCI, there is no subsequent reclassification of fair value gains
and losses to the Consolidated Statement of profit and loss. an equity instrument is any contract that evidences a
When the financial asset is derecognised, the cumulative residual interest in the assets of an entity after deducting
gain or loss previously recognised in oCI is reclassified to all of its liabilities. equity instruments issued by the group
equity. dividends from such investments are recognised are recorded at the proceeds received, net of direct issue
in the Consolidated Statement of profit and loss within costs.
other income when the group’s right to receive payments is
established. Impairment losses (and reversal of impairment 2.15.3 Financial liabilities
losses) on equity investments measured at FVtoCI are not the group’s financial liabilities comprise borrowings, trade
reported separately from other changes in fair value. payables and other liabilities. these are initially measured
at fair value, net of transaction costs, and are subsequently
Cash and cash equivalents measured at amortised cost using the eIr method. the
the group considers all highly liquid financial instruments, eIr is a method of calculating the amortised cost of a
which are readily convertible into known amounts of financial liability and of allocating interest expense over
cash, that are subject to an insignificant risk of change in the relevant period at effective interest rate. the effective
value with a maturity within three months or less from interest rate is the rate that exactly discounts estimated
the date of purchase, to be cash equivalents. Cash and future cash payments through the expected life of the
cash equivalents consist of balances with banks which are financial liability, or, where appropriate, a shorter period.
unrestricted for withdrawal and usage.
Changes to the carrying amount of a financial liability
Derecognition of financial assets as a result of renegotiation or modification of terms that
do not result in derecognition of the financial liability, is
a financial asset is derecognised only when the group
recognised in the Consolidated Statement of profit and
• has transferred the rights to receive cash flows from loss.
the financial asset; or
Derecognition of financial liabilities
• retains the contractual rights to receive the cash
flows of the financial asset, but assumes a contractual the group derecognises financial liabilities when, and only
obligation to pay the cash flows to one or more when, its obligations are discharged, cancelled or they
recipients. expire.

256 I Integrated annual report 2019-20