Page 130 - FBL AR 2019-20

Fermenta Biotech Limited
Annual Report 2019-20

Notes to the Standalone financial statements for the year ended March 31, 2020

The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at
FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in
the balance sheet.
Financial liabilities and equity instruments
Classification as debts or equity:
Debts and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments:
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue cost.
Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in
statement of profit and loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
Financial liabilities:
Initial recognition and measurement:
All 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 as at fair value through profit or loss are recognised
immediately in profit or loss.
Subsequent measurement:
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. However, financial
liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach
applies, financial guarantee contracts, issued by the Company, and commitments issued by the Company to provide a loan at below-
market interest rate are measured in accordance with the specific accounting policies set out below.

Financial liabilities at FVTPL:
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as
an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent
actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘Other income’
line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the
recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting
mismatch in profit, or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount
of change in the fair value of liability is always recognised in profit and loss. Changes in fair value attributable to a financial liability’s
credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently
reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the company that are designated by the Company as
at fair value through profit or loss are recognised in profit or loss.
Fair value is determined in the manner described in note 51.

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