2. MATERIAL ACCOUNTING POLICIES
This note provides a list of the material accounting policies adopted in the preparation of these Standalone Financial Statements.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.01 Basis of preparation
i) Compliance with IndAS
The Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed
under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies
(Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013.
ii) Historical cost convention
The Standalone Financial Statements have been prepared on a historical cost basis, except for the following assets and liabilities:
i) Certain financial assets and liabilities that are measured at fair value
ii) Defined benefit plans-plan assets measured at fair value
The Standalone Financial Statements are presented in Indian Rupees ('INR') and all values are rounded to nearest millions
(INR '000,000) upto two decimal places, except when otherwise indicated.
iii) Current versus non-current classification
The Company presents assets and liabilities in the Standalone balance sheet based on current/non- current classification. An
asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non current.
Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents
The Company has identified twelve months as its operating cycle.
2.02 Property, plant and equipment
Property, plant and equipment including capital work in progress are stated at cost, less accumulated depreciation and accumulated
impairment losses, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental expenses directly attributable
and related to acquisition and installation of the concerned assets and are further adjusted by the amount of input tax credit availed
wherever applicable. Subsequent costs are included in asset's carrying amount or recognised as separate assets, as appropriate, only
when it is probable that future economic benefit associated with the item will flow to the Company and the cost of item can be
measured reliably. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates
them separately based on their respective useful lives. Likewise, when a major inspection is performed, its cost is recognized in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance
costs are recognized in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its
use is included in the cost of the respective asset if the recognition criteria for a provision are met.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when
the asset is derecognised.
Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the balance
sheet date.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end
and adjusted prospectively, if appropriate.
Depreciation on property, plant and equipment is provided on prorata basis on written-down value method using the useful lives
of the assets estimated by management and in the manner prescribed in Schedule II of the Companies Act 2013. The useful life is as
follows:
Lab Equipment* 15
*Based on Internal assessment the management believes that the useful life given above best represent the period over which
management expects to use these assets
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all the items of property, plant and
equipment recognized as at 1 April 2019, measured as per the previous GAAP, and use that carrying value as the deemed cost of
such property, plant and equipment.
2.03 Intangible assets
Separately acquired intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Internally generated
intangibles, excluding capitalized development cost, are
not capitalized and the related expenditure is reflected
in statement of Profit and Loss in the period in which the
expenditure is incurred. Cost comprises the purchase price
and any attributable cost of bringing the asset to its working
condition for its intended use.
2.04 Research and development cost
Research costs are expensed as incurred. Development
expenditure incurred on an individual project is recognized
as an intangible asset when the Company can demonstrate
all the following:
i) The technical feasibility of completing the intangible
asset so that it will be available for use or sale;
ii) Its intention to complete the asset;
iii) Its ability to use or sell the asset;
iv) How the asset will generate future economic benefits;
v) The availability of adequate resources to complete the
development and to use or sell the asset; and
vi) The ability to measure reliably the expenditure
attributable to the intangible asset during development.
Following the initial recognition of the development
expenditure as an asset, the cost model is applied requiring
the asset to be carried at cost less any accumulated
amortization and accumulated impairment losses.
Amortization of the asset begins when development is
complete and the asset is available for use. It is amortized on
straight line basis over the estimated useful life. During the
period of development, the asset is tested for impairment
annually.
The useful lives of intangible assets are assessed as either
finite or indefinite. Intangible assets with finite lives are
amortized over their useful economic lives and assessed
for impairment whenever there is an indication that the
intangible asset may be impaired. The amortization period
and the amortization method for an intangible asset
with a finite useful life is reviewed at least at the end of
each reporting period. Changes in the expected useful
life or the expected pattern of consumption of future
economic benefits embodied in the asset is accounted
for by changing the amortization period or method, as
appropriate, and are treated as changes in accounting
estimates. The amortization expense on intangible assets
with finite lives is recognized in the statement of profit and
loss in the expense category consistent with the function of
the intangible assets.
Intangible assets with indefinite useful lives are not
amortized, but are tested for impairment annually,
either individually or at the cash-generating unit level.
The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be
supportable. If not, the change in useful life from indefinite
to finite is made on a prospective basis.
Gains or losses arising from disposal of the intangible assets
are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognized in the statement of profit and loss when the
assets are disposed off.
Intangible assets with finite useful life are amortized on a
straight line basis over the estimated useful economic life
of 5 years, which represents the period over which the
Company expects to derive economic benefits from the use
of the assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue
with the carrying value of all the items of intangible assets
recognized as at 1 April 2019, measured as per the previous
GAAP, and use that carrying value as the deemed cost of
such Intangible assets.
2.05 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
(i) Financial Assets
The Company classifies its financial assets in the following
measurement categories:
- Those to be measured subsequently at fair value (either
through other comprehensive income, or through profit
or loss)
- Those measured at amortized cost
The classification depends on entity's business model for
managing the financial assets and the contractual terms of
the cash flow.
Initial recognition and measurement
All financial assets are recognized initially at fair value plus,
in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable
to the acquisition of the financial asset. Transaction cost of
financial assets carried at fair value through profit or loss are
expensed in profit or loss.
Subsequent measurement
For purposes of subsequent measurement, financial assets
are classified in following categories:
- Debt instruments at fair value through profit and loss
(FVTPL)
- Debt instruments at fair value through other
comprehensive income (FVTOCI)
- Debt instruments at amortized cost
- Equity instruments
Where assets are measured at fair value, gains and losses
are either recognized entirely in the statement of profit
and loss (i.e. fair value through profit or loss),or recognized
in other comprehensive income( i.e. fair value through
other comprehensive income). For investment in debt
instruments, this will depend on the business model in
which the investment is held. For investment in equity
instruments, this will depend on whether the Company
has made an irrevocable election at the time of initial
recognition to account for equity instruments at FVTOCI
Debt instruments at amortized cost
A Debt instrument is measured at amortized cost if both the
following conditions are met:
a) Business Model Test : The objective is to hold the
financial asset to collect the contractual cash flows
(rather than to sell the instrument prior to its contractual
maturity to realize its fair value changes).
b) Cash flow characteristics test: The contractual terms
of the Debt instrument give rise on specific dates to
cash flows that are solely payments of principal and
interest on principal amount outstanding.
This category is most relevant to the Company. After initial
measurement, such financial assets are subsequently
measured at amortized cost using the effective interest rate
(EIR) method. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees
or costs that are an integral part of EIR. EIR is the rate that
exactly discounts the estimated future cash receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount of
the financial asset. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument but does not consider the expected credit losses.
The EIR amortization is included in other income in profit
or loss. The losses arising from impairment are recognized
in the profit or loss. This category generally applies to trade
and other receivables.
Debt instruments at fair value through OCI
A Debt instrument is measured at fair value through other
comprehensive income if following criteria are met:
a) Business Model Test : The objective of financial
instrument is achieved by both collecting contractual
cash flows and for selling financial assets.
b) Cash flow characteristics test: The contractual terms
of the Debt instrument give rise on specific dates to
cash flows that are solely payments of principal and
interest on principal amount outstanding.
Debt instrument included within the FVTOCI category are
measured initially as well as at each reporting date at fair
value. Fair value movements are recognized in the other
comprehensive income (OCI), except for the recognition
of interest income, impairment gains or losses and foreign
exchange gains or losses which are recognized in statement
of profit and loss. On derecognition of asset, cumulative
gain or loss previously recognized in OCI is reclassified from
the equity to statement of profit & loss. Interest earned
whilst holding FVTOCI financial asset is reported as interest
income using the EIR method.
Debt instruments at FVTPL
FVTPL is a residual category for financial instruments. Any
financial instrument, which does not meet the criteria for
amortized cost or FVTOCI, is classified as at FVTPL. A gain or
loss on a Debt instrument that is subsequently measured
at FVTPL and is not a part of a hedging relationship is
recognized in statement of profit or loss and presented
net in the statement of profit and loss within other gains or
losses in the period in which it arises. Interest income from
these Debt instruments is included in other income.
Equity investments of other entities
All equity investments in scope of IND AS 109 are measured
at fair value. Equity instruments which are held for trading
and contingent consideration recognized by an acquirer
in a business combination to which IND AS103 applies are
classified as at FVTPL. For all other equity instruments, the
Company may make an irrevocable election to present in
other comprehensive income all subsequent changes in
the fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is made
on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as
at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no
recycling of the amounts from OCI to profit and loss, even
on sale of investment. However, the Company may transfer
the cumulative gain or loss within equity. Equity instruments
included within the FVTPL category are measured at fair
value with all changes recognized in the Profit and loss.
Derecognition
A financial asset (or ,where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognized (i.e. removed from the Company's
statement of financial position) when:
- The rights to receive cash flows from the asset have
expired, or
- The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to
a third party under a "pass through" arrangement and
either;
(a) the Company has transferred the rights to receive cash
flows from the financial assets or
(b) the Company has retained the contractual right
to receive the cash flows of the financial asset, but
assumes a contractual obligation to pay the cash flows
to one or more recipients.
Where the Company has transferred an asset, the Company
evaluates whether it has transferred substantially all the risks
and rewards of the ownership of the financial assets. In such
cases, the financial asset is derecognized. Where the entity
has not transferred substantially all the risks and rewards of
the ownership of the financial assets, the financial asset is
not derecognized.
Where the Company has neither transferred a financial asset
nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognized if
the Company has not retained control of the financial asset.
Where the Company retains control of the financial asset,
the asset is continued to be recognized to the extent of
continuing involvement in the financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit losses (ECL) model for measurement and
recognition of impairment loss on the following financial
asset and credit risk exposure
- Financial assets measured at amortized cost;
- Financial assets measured at fair value through other
comprehensive income(FVTOCI);
The Company follows "simplified approach" for recognition
of impairment loss allowance on:
- Trade receivables or contract revenue receivables;
Under the simplified approach, the Company does not track
changes in credit risk. Rather , it recognizes impairment
loss allowance based on lifetime ECLs at each reporting
date, right from its initial recognition. The Company uses a
provision matrix to determine impairment loss allowance
on the portfolio of trade receivables. The provision matrix
is based on its historically observed default rates over the
expected life of trade receivable and is adjusted for forward
looking estimates. At every reporting date, the historical
observed default rates are updated and changes in the
forward looking estimates are analysed.
For recognition of impairment loss on other financial assets
and risk exposure, 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. If, in subsequent period, credit quality of
the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition,
then the Company reverts to recognizing impairment loss
allowance based on 12- months ECL.
Lifetime ECL are the expected credit losses resulting from all
possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime
ECL which results from default events that are possible
within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that
are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive
(i.e., all cash shortfalls), discounted at the original EIR. When
estimating the cash flows, an entity is required to consider:
(i) All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the expected
life of the financial instrument cannot be estimated
reliably, then the entity is required to use the remaining
contractual term of the financial instrument
(ii) Cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual
terms
ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/ expense in the
statement of profit and loss. This amount is reflected under
the head 'other expenses' in the statement of profit and
loss. The balance sheet presentation for various financial
instruments is described below:
(a) Financial assets measured as at amortized cost:
ECL is presented as an allowance, i.e., as an integral part
of the measurement of those assets in the balance sheet.
The allowance reduces the net carrying amount. Until the
asset meets write-off criteria, the Company does not reduce
impairment allowance from the gross carrying amount.
(b) Loan commitments and financial guarantee
contracts: ECL is presented as a provision in the balance
sheet, i.e. as a liability.
(c) Debt instruments measured at FVTOCI: For debt
instruments measured at FVTOCI, the expected credit losses
do not reduce the carrying amount in the balance sheet,
which remains at fair value. Instead, an amount equal to
the allowance that would arise if the asset was measured
at amortised cost is recognised in other comprehensive
income as the "accumulated impairment amount".
(ii) Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified at initial recognition as
financial liabilities at fair value through profit or loss, loans
and borrowings, and payables, net of directly attributable
transaction costs. the Company financial liabilities include
loans and borrowings including bank overdraft, trade
payables, trade deposits, retention money, liabilities towards
services, sales incentive and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in
the near term. This category also includes derivative financial
instruments entered into by the Company that are not
designated as hedging instruments in hedge relationship
as defined by Ind AS 109. The separated embedded
derivate are also classified as held for trading unless they are
designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized
in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair
value through profit or loss are designated as such at the
initial date of recognition, and only if the criteria in Ind AS
109 are satisfied. For liabilities designated as FVTPL, fair value
gains/ losses attributable to changes in own credit risk are
recognized in OCI. These gains/ loss are not subsequently
transferred to profit and loss. However, the Company may
transfer the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognized in the
statement of profit or loss. The Company has not designated
any financial liability as at fair value through profit and loss.
Trade Payables
These amounts represents liabilities for goods and services
provided to the Company prior to the end of financial year
which are unpaid. The amounts are unsecured and are
usually paid within 90 days of recognition. Trade and other
payables are presented as current liabilities unless payment
is not due within 12 months after the reporting period.
They are recognized initially at fair value and subsequently
measured at amortized cost using Effective interest rate
method.
Loans and borrowings
Borrowings are initially recognized at fair value, net of
transaction cost incurred. After initial recognition, interest¬
bearing borrowings are subsequently measured at
amortized cost using the Effective interest rate method. Gains
and losses are recognized in profit or loss when the liabilities
are derecognised as well as through the Effective interest
rate amortization process. Amortized cost is calculated by
taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the Effective
interest rate. The Effective interest rate amortization is
included as finance costs in the statement of profit and loss.
Borrowing are classified as current liabilities unless the
Company has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting
period.
Derecognition
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognized in the statement of profit and loss.
Offsetting of financial instruments:
Financials assets and financial liabilities are offset and the
net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, to
realize the assets and settle the liabilities simultaneously.
Reclassification of financial assets/ financial liabilities
The Company determines classification of financial assets
and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are
equity instruments and financial liabilities. For financial
assets which are debt instruments, a reclassification is
made only if there is a change in the business model for
managing those assets. Changes to the business model
are expected to be infrequent. The Company's senior
management determines change in the business model as
a result of external or internal changes which are significant
to the Company's operations. Such changes are evident to
external parties. A change in the business model occurs
when the Company either begins or ceases to perform an
activity that is significant to its operations. If the Company
reclassifies financial assets, it applies the reclassification
prospectively from the reclassification date which is the
first day of the immediately next reporting period following
the change in business model. The Company does not
restate any previously recognised gains, losses (including
impairment gains or losses) or interest.
2.06 Inventories
a) Basis of valuation:
Inventories are valued at lower of cost and net
realizable value after providing cost of obsolescence,
if any. However, materials and other items held for use
in the production of inventories are not written down
below cost if the finished products in which they will
be incorporated are expected to be sold at or above
cost. The comparison of cost and net realizable value is
made on an item-by-item basis.
b) Method of Valuation:
i) Cost of raw materials and components has been
determined by using FIFO method and comprises
all costs of purchase, duties, taxes (other than those
subsequently recoverable from tax authorities) and all
other costs incurred in bringing the inventories to their
present location and condition.
ii) Cost of finished goods and work-in-progress
includes raw material, packing material, direct labour
and an appropriate share of fixed and variable
production overheads and excise duty as applicable.
Fixed production overheads are allocated on the basis of
normal capacity of production facilities.
iii) Net realizable value is the estimated selling price
in the ordinary course of business, less estimated costs
of completion and estimated costs necessary to make
the sale.
2.07 Taxes
Income tax expense comprises current tax expense and
the net change in the deferred tax asset or liability during
the year. Current and deferred tax are recognised in the
Statement of Profit and Loss, except when they relate to
items that are recognised in Other Comprehensive Income
or directly in equity, in which case, the current and deferred
tax are also recognised in Other Comprehensive Income or
directly in equity, respectively.
Current tax:
Current tax expenses are accounted in the same period
to which the revenue and expenses relate. Provision for
current income tax is made for the tax liability payable
on taxable income after considering tax allowances,
deductions and exemptions determined in accordance
with the applicable tax rates and the prevailing tax laws.
The Company's management periodically evaluates
positions taken in the tax returns with respect to situations
in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Current tax assets and current tax liabilities are offset when
there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle the asset and the
liability on a net basis.
Deferred tax:
Deferred income tax is recognised using the balance sheet
approach. Deferred tax assets and liabilities are recognised
for deductible and taxable temporary differences arising
between the tax base of assets and liabilities and their
carrying amount in financial statements, except when
the deferred tax arises from the initial recognition of
goodwill, an asset or liability in a transaction that is not
a business combination and affects neither accounting
nor taxable profits or loss at the time of the transaction.
Deferred income tax assets are recognised to the extent that it
is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward
of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at
each reporting date and are recognised to the extent that it
has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the
tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based
on tax rates (and tax laws) that have been enacted or
substantially enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net
basis.
2.08 Revenue from contracts with customers
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange for
those goods or services. The Company collects Goods and
Service Tax on behalf of government, and therefore, these
are not consideration to which the Company is entitled,
hence, these are excluded from revenue. The Company has
generally concluded that it is the principal in its revenue
arrangements because it typically controls the goods or
services before transferring them to the customer. Revenue
includes adjustments made towards liquidated damages
and variation wherever applicable as per contract.
a) Revenue from sale of goods
Revenue from sale of goods is recognised
at the point in time when significant risk
and rewards of ownership of the goods is
transferred to the customer, generally ex-factory.
The Company considers whether there are other
promises in the contract that are separate performance
obligations to which a portion of the transaction
price needs to be allocated. In determining the
transaction price for the sale of goods, the Company
considers the effects of variable consideration, the
existence of significant financing components, non¬
cash consideration, and consideration payable to the
customer (if any).
b) Revenue from sale of services
Revenue from sale of services is recognised over a
period of time because the customer simultaneously
receives and consumes the benefits provided by
the Company and accounted revenue as and when
services are rendered on cost plus basis where cost
is determined on principles mutually agreed with
customers.
c) Consideration of significant financing component
in a contract
The Company receives short-term advances from its
customers. Using the practical expedient in Ind AS 115,
the Company does not adjust the promised amount of
consideration for the effects of a significant financing
component if it expects, at contract inception, that the
period between the transfer of the promised good or
service to the customer and when the customer pays
for that good or service will be one year or less.
d) Trade Receivables
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course
of business. They are generally due for settlement
within one year and therefore are all classified as
current. Where the settlement is due after one year,
they are classified as non-current. Trade receivables
are recognised initially at the amount of consideration
that is unconditional unless they contain significant
financing components, when they are recognised at
fair value. The Company holds the trade receivables
with the objective to collect the contractual cash
flows and therefore measures them subsequently at
amortised cost using the effective interest method.
e) Contract Assets
A contract asset is the entity's right to consideration
in exchange for goods or services that the entity has
transferred to the customer. A contract asset becomes
a receivable when the entity's right to consideration is
unconditional, which is the case when only the passage
of time is required before payment of the consideration
is due. The impairment of contract assets is measured,
presented and disclosed on the same basis as trade
receivables.
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