Page 150 - Tata_Chemicals_yearly-reports-2017-18

through OCI. For investments in debt instruments, ʀ Fair value through profit or loss (‘FVTPL’)
this will depend on the business model in which
Assets that do not meet the criteria for amortised
the investment is held. For investments in equity cost or FVTOCI are measured at FVTPL. A gain or
instruments, this will depend on whether the Company loss on a debt investment that is subsequently
has made an irrevocable election at the time of initial measured at FVTPL (unhedged) is recognised net
recognition to account for the equity investment at
in the Statement of Profit and Loss in the period in
fair value through OCI. The Company has elected to
which it arises. Interest income from these financial
consider the carrying cost of equity investments in assets is included in other income.
subsidiaries and joint venture at cost.
Equity instruments
The Company reclassifies debt investments when and
only when its business model for managing those The Company subsequently measures all equity
assets changes. investments at fair value. Where the Company’s
management has elected to present fair value gains
Debt instruments
and losses on equity investments in OCI, there is no
Measurement subsequent reclassification of fair value gains and
losses to the Statement of Profit and Loss. When the
At initial recognition, the Company measures a
financial asset at its fair value (other than financial asset financial asset is derecognised, the cumulative gain
or loss previously recognised in OCI is reclassified
at fair value through profit or loss). Transaction costs
to equity. Dividends from such investments are
that are directly attributable to the acquisition of the
financial assets are added to the fair value measured recognised in the Statement of Profit and Loss within
on initial recognition. Transaction costs of financial other income when the Company’s right to receive
assets carried at fair value through profit or loss are payments is established. Impairment losses (and
reversal of impairment losses) on equity investments
expensed in the Statement of Profit and Loss.
measured at FVTOCI are not reported separately from
Subsequent measurement of debt instruments other changes in fair value.
depends on the Company’s business model for
managing the asset and the cash flow characteristics Cash and cash equivalents
of the asset. There are three measurement categories The Company considers all highly liquid financial
into which the Company classifies its debt instruments: instruments, which are readily convertible into known
amounts of cash, that are subject to an insignificant
ʀ Amortised cost
risk of change in value with a maturity within three
Assets that are held for collection of contractual months or less from the date of purchase, to be
cash flows, where those cash flows represent solely cash equivalents. Cash and cash equivalents consist
payments of principal and interest, are measured at of balances with banks which are unrestricted for
amortised cost. A gain or loss on a debt investment withdrawal and usage.
(unhedged) that is subsequently measured at
amortised cost is recognised in the Statement of Derecognition of financial assets
Profit and Loss when the asset is derecognised A financial asset is derecognised only when the
or impaired. Interest income from these financial Company
assets is included in finance income using the
ʀ has transferred the rights to receive cash flows
effective interest rate (‘EIR’) method.
from the financial asset; or
ʀ Fair value through other comprehensive ʀ retains the contractual rights to receive the
income (‘FVTOCI’)
cash flows of the financial asset, but assumes a
Assets that are held for collection of contractual contractual obligation to pay the cash flows to one
cash flows and for selling the financial assets, or more recipients.
where the assets’ cash flows represent solely Where the Company transfers an asset, it evaluates
payments of principal and interest, are measured whether it has transferred substantially all risks and
at FVTOCI. Movements in the carrying amount are rewards of ownership of the financial asset. Where
recorded through OCI, except for the recognition
the Company has transferred substantially all risks
of impairment gains or losses, interest revenue
and rewards of ownership, the financial asset is
and foreign exchange gains or losses which are derecognised. Where the Company has not transferred
recognised in the Statement of Profit and Loss. substantially all risks and rewards of ownership of the
When the financial asset is derecognised, the financial asset, the financial asset is not derecognised.
cumulative gain or loss previously recognised in
Where the Company has neither transferred a financial
OCI is reclassified from equity to the Statement
asset nor retained substantially all risks and rewards of
of Profit and Loss. Interest income from these ownership of the financial asset, the financial asset is
financial assets is included in other income using
the EIR method.

148 Annual Report 2017-18