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Shaping the future of software driven business
Consolidated Financials •
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- Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets that are held within a business model whose objective is achieved both by collecting contractual cash
flows and selling the financial assets and the assets’ contractual cash flows represent solely payments of principal
and interest on the principal amount outstanding are subsequently measured at fair value. Fair value movements are
recognized in other comprehensive income.
- Financial assets at fair value through profit or loss (FVTPL)
Any financial asset which does not meet the criteria for categorization as financial assets at amortized cost or as
FVTOCI, is classified as financial asset at FVTPL. Financial assets except derivative contracts included within the FVTPL
category are subsequently measured at fair value with all changes recognized in the statement of profit and loss.
- Forward exchange contracts not intended for trading or speculation purposes, classified as derivative financial
instruments
As per the accounting principles laid down in Ind AS 109 – “Financial Instruments” relating to cash flow hedges,
derivative financial instruments which qualify for cash flow hedge accounting are fair valued at balance sheet date and
the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive
income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments
are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair
value is negative.
Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the
statement of profit and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no
longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other
comprehensive income is transferred to the statement of profit and loss when the forecasted transaction occurs or
affects profit or loss or when a hedged transaction is no longer expected to occur.
Derecognition
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income, and accumulated in equity, if any is recognised in profit or loss.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue
of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair
value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Subsequent measurement
For the purpose of subsequent measurement, financial liabilities are classified as:
- Financial liabilities at amortized cost
Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective
interest rate method. The change in measurements are recognized as finance costs in the statement of profit and
loss.
- Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss if the recognition criteria as per Ind AS 109 are satisfied. Gains
or losses on liabilities held for trading are recognized in statement of profit and loss. Fair value gains or losses on
liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other comprehensive
Notes forming part of consolidated financial statements (Contd.)