Amal Ltd 2017-18

Amal Ltd | Annual Report 2017-2018 Note 1 Significant Accounting Policies (continued) g) Impairment of assets: The carrying amounts of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal | external factors. An impairment loss on such assessment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment loss had previously been recognised. h) Cash and cash equivalents: Cash and cash equivalents include cash in hand, demand deposits with bank and other short-term (3 months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. i) Trade receivables: Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the EIR method, less provision for impairment based on expected credit loss. j) Trade and other payables: These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the EIR method. k) Inventories: Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on First-in, First-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. ‘Cost’ comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition. Items such as spare parts, stand-by equipment and servicing equipment which are not plant and machinery gets classified as inventory. l) Investments and other financial assets: Classification: The Company classifies its financial assets in the following measurement categories: i) Those to be measured subsequently at fair value (either through Other Comprehensive Income (FVOCI), or through profit or loss (FVPL) ii) Those measured at amortised cost. The classification depends on the business model of the Company for managing financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or Other Comprehensive Income (OCI). For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI. Initial recognition and measurement: Financial asset is recognised when the Company becomes a party to the contractual provisions of the instrument. Financial asset is recognised initially at fair value plus, in the case of financial asset not recorded Notes to the Financial Statements