Page 260 - Tata_Chemicals_yearly-reports-2019-20

2.16 Impairment an impairment loss in respect of goodwill is not
Financial assets (other than at fair value) subsequently reversed, In respect of other assets for which
impairment loss has been recognised in prior periods, the
the group assesses on a forward looking basis the group reviews at each reporting date whether there is any
expected credit losses associated with its assets carried at indication that the loss has decreased or no longer exists.
amortised cost and debt instruments carried at FVtoCI.
the impairment methodology applied depends on an impairment loss is reversed if there has been a change in
whether there has been a significant increase in credit the estimated used to determine the recoverable amount.
risk. In respect of trade receivables the group applies the Such a reversal is made only to the extent that the asset’s
simplified approach permitted by Ind aS 109 - Financial carrying amount does not exceed the carrying amount
Instruments, which requires expected lifetime losses to that would have been determined, net of depreciation or
be recognised upon initial recognition of the receivables. amortisation, if no impairment loss had been recognised.
For all other financial assets, expected credit losses are
measured at an amount equal to the 12-months expected 2.17 Inventories
credit losses or at an amount equal to the life time Inventories are valued at lower of cost (on weighted
expected credit losses if the credit risk on the financial average basis) and net realisable value after providing
asset has increased significantly since initial recognition. for obsolescence and other losses, where considered
necessary. Cost includes all charges in bringing the goods
PPE, CWIP and intangible assets to their present location and condition, including other
the carrying values of assets / Cgus at each Balance Sheet levies, transit insurance and receiving charges. Work-
date are reviewed to determine whether there is any in-progress and finished goods include appropriate
indication that an asset may be impaired. If any indication proportion of overheads and, where applicable, taxes and
of such impairment exists, the recoverable amount of duties. net realisable value is the estimated selling price in
such assets / Cgu is estimated and in case the carrying the ordinary course of business, less the estimated costs
amount of these assets exceeds their recoverable amount, of completion and the estimated costs necessary to make
an impairment loss is recognised in the Consolidated the sale.
Statement of profit and loss. the recoverable amount is the
higher of the net selling price and their value in use. Value 2.18 Revenue recognition
in use is arrived at by discounting the future cash flows 2.18.1 Sale of goods
to their present value based on an appropriate discount revenue is recognised upon transfer of control of
factor. assessment is also done at each Balance Sheet promised goods to customers in an amount that reflects
date as to whether there is indication that an impairment the consideration which the group expects to receive in
loss recognised for an asset in prior accounting periods exchange for those goods.
no longer exists or may have decreased, consequent to
which such reversal of impairment loss is recognised in the
Consolidated Statement of profit and loss. revenue from the sale of goods is recognised at the
point in time when control is transferred to the customer
Goodwill which is usually on dispatch / delivery of goods, based on
contracts with the customers.
goodwill is tested for impairment, at least annually and
whenever circumstances indicate that it may be impaired.
For the purpose of impairment testing, the goodwill is revenue is measured based on the transaction price,
allocated to a Cgu or group of Cgus, which are expected which is the consideration, adjusted for volume discounts,
to benefit from the synergies arising from the business price concessions, incentives, and returns, if any, as
combination in which the said goodwill arose. specified in the contracts with the customers. revenue
excludes taxes collected from customers on behalf of
If the estimated recoverable amount of the Cgu including the government. accruals for discounts/incentives and
the goodwill is less than its carrying amount, the returns are estimated (using the most likely method) based
impairment loss is allocated first to reduce the carrying on accumulated experience and underlying schemes and
amount of any goodwill allocated to the Cgu and then agreements with customers. due to the short nature of
to the other assets of the Cgu on a pro-rata basis of the credit period given to customers, there is no financing
carrying amount of each asset in the unit. component in the contract.

258 I Integrated annual report 2019-20