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Shaping the future of software driven business
Unconsolidated Financials •
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For trade receivables, the Company recognizes impairment loss allowance based on lifetime ECL at each reporting
date, right from its initial recognition. For other financial assets, the Company determines whether there has been
a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12
month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL
is used.
ii) Non-financial assets
The carrying amounts of Property, Plant and Equipment are reviewed at each balance sheet date or whenever there
is any indication of impairment based on internal/external factors. If any indications exist, the Company estimates
the asset’s recoverable amount unless the asset does not generate cash flows that are largely independent of
those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU)
to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying
amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The recoverable amount
is the greater of the asset’s fair value and its value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and risks specific to the asset.
An impairment loss is recognised in the statement of profit and loss.
Recoverable amount of intangible under development that is not yet available for use is estimated at least at each
financial period end even if there is no indication that the asset is impaired.
(f) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of
borrowings.
Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes
a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective
asset. All other borrowing costs are expensed in the year they occur
Amendment to Ind AS 23 Borrowing costs:
The amendments clarify that if any specific borrowing remains outstanding
after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity
borrows generally when calculating the capitalisation rate on general borrowings. The Company does not expect any
impact related to this amendment.
(g) Leases
Where the Company is a lessee
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are
classified as operating leases.
Operating lease payments are recognized as an expense in the statement of profit and loss as per the terms of the lease
agreements.
Ind AS 116 Leases:
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace
the existing leases Standard, Ind AS 17 Leases, and related Interpretations. The Standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the
lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for
all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease
expenses are charged to the statement of Profit & Loss. The Standard also contains enhanced disclosure requirements for
lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.
The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits
two possible methods of transition:
• Full retrospective – Retrospectively to each prior period presented applying Ind AS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
• Modified retrospective – Retrospectively, with the cumulative effect of initially applying the Standard recognized at the
date of initial application.
Notes forming part of financial statements (Contd.)