Page 216 - Tata Chemical Annual Report_2022-2023

Integrated Annual Report 2022-23 01-83
and/ or for capital appreciation. Investment
properties are initially recognised at cost
including transaction costs. Subsequently
investment properties comprising buildings are
carried at cost less accumulated depreciation and
accumulated impairment losses, if any.
Depreciation on buildings is provided over the
estimated useful lives as specified in note 2.5
above. The residual values, estimated useful
lives and depreciation method of investment
properties are reviewed, and adjusted on
prospective basis as appropriate, at each
reporting date. The effects of any revision are
included in the Standalone Statement of Profit
and Loss when the changes arise.
An investment property is de-recognised
when either the investment property has been
disposed of or do not meet the criteria of
investment property i.e. when the investment
property is permanently withdrawn from use and
no future economic benefit is expected from its
disposal. The difference between the net disposal
proceeds and the carrying amount of the asset is
recognised in the Standalone Statement of Profit
and Loss in the period of de-recognition.
2.9 Research and development expenses
Research expenses are charged to the Standalone
Statement of Profit and Loss as expenses in the
year in which they are incurred. Development
costs are capitalised as an intangible asset under
development when the following criteria are met:
• the project is clearly defined, and the
costs are separately identified and
reliably measured;
• the technical feasibility of the project
is demonstrated;
• the ability to use or sell the
products created during the project
is demonstrated;
• the intention to complete the project
exists and use or sale of output
manufactured during the project;
• a potential market for the products
created during the project exists or
their usefulness, in case of internal use,
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is demonstrated, such that the project
will generate probable future economic
benefits; and
• adequate resources are available to
complete the project.
These development costs are amortised over
the estimated useful life of the projects or the
products they are incorporated within. The
amortisation of capitalised development costs
begins as soon as the related product is released
to production.
2.10 Non-current assets held for sale and
discontinued operations
Non-current assets (including disposal groups)
are classified as held for sale if their carrying
amount will be recovered principally through a
sale transaction rather than through continuing
use and a sale is considered highly probable.
Non-current assets classified as held for sale are
measured at lower of their carrying amount and
fair value less cost to sell.
Non-current assets classified as held for sale
are not depreciated or amortised from the date
when they are classified as held for sale.
Non-current assets classified as held for sale
and the assets and liabilities of a disposal group
classified as held for sale are presented separately
from the other assets and liabilities in the
Standalone Balance Sheet.
A discontinued operation is a component of the
entity that has been disposed off or is classified
as held for sale and:
• represents a separate major line of
business or geographical area of
operations and;
• is part of a single co-ordinated plan to
dispose of such a line of business or area
of operations.
The results of discontinued operations are
presented separately in the Standalone
Statement of Profit and Loss.
Statutory Reports Financial Statements
Standalone
2.11 Financial instruments
2.11.1 Investments and other financial assets:
Classification
The Company classifies its financial assets
in the following measurement categories:
• those to be measured
subsequently at fair value (either
through OCI, or through profit or
loss), and
• those measured at amortised cost.
• those measured at carrying
cost for equity instruments
subsidiaries and joint ventures.
The classification depends on the
Company’s business model for managing
the financial assets and the contractual
terms of the cash flows. For assets
measured at fair value, gains and losses
will either be recorded in the Standalone
Statement of Profit and Loss or through
OCI. 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 OCI.
The Company reclassifies debt
investments when and only when its
business model for managing those
assets changes.
Debt instruments
Measurement
A financial asset or financial liability is
initially measured at fair value plus, for
an item not at fair value through profit
and loss (FVTPL), transaction costs that
are directly attributable to its acquisition
or issue. Transaction costs of financial
assets carried at fair value through profit
or loss are expensed in the Standalone
Statement of Profit and Loss.
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:
• Amortised cost
Assets that are held for collection of
contractual cash flows, where those
cash flows represent solely payments
of principal and interest, are measured
at amortised cost. A gain or loss on a
debt investment (unhedged) that is
subsequently measured at amortised
cost is recognised in the Standalone
Statement of Profit and Loss when
the asset is derecognised or impaired.
Interest income from these financial
assets is included in other income using
the effective interest rate (‘EIR’) method.
• Fair value through Other Comprehensive
Income (‘FVTOCI’)
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 recorded through OCI, except
for the recognition of impairment gains
or losses, interest revenue and foreign
exchange gains or losses which are
recognised in the Standalone Statement
of Profit and Loss. When the financial
asset is derecognised, the cumulative
gain or loss previously recognised in
OCI is reclassified from equity to the
Standalone Statement of Profit and Loss.
Interest income from these financial
assets is included in other income using
the EIR method.
• Fair value through profit or loss (‘FVTPL’)
Assets that do not meet the criteria for
amortised cost or FVTOCI are measured at
FVTPL. A gain or loss on a debt investment
(including current investments) that
is subsequently measured at FVTPL
(unhedged) is recognised net in the
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