Amal Ltd 2020-21

Amal Ltd | Annual Report 2020-21 Note 1 Significant accounting policies (continued) Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to the present location and condition. Due allowances are made for slow | non-moving, defective and obsolete inventories based on estimates made by the Company. Items such as spare parts, stand-by equipment and servicing equipment that are not plant and equipment get classified as inventory. m) Investments and other financial assets Classification and measurement 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, or through profit or loss) ii) those measured at amortised cost The classification depends on 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. 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 other comprehensive income. Debt instruments 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 case the financial asset is not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial asset carried at fair value through profit or loss are expensed in the Standalone Statement of Profit and Loss. Subsequent measurement Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and the cash flowcharacteristics of the asset. There are threemeasurement categories into which the Company classifies its debt instruments: Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently