| 160 Annual Report | 2024-2025 Financials Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2025 (Contd.) to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. A trade receivables without significant financing component is initially measured at transaction price. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets carried at amortised cost All financial assets are required to be initially measured at fair value plus or minus the transaction costs. A financial asset is measured at the amortised cost if both the following conditions are met: (a) The asset is held within a business model whose objective is to hold assets for collecting contractual cashflows, and (b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised 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 the EIR. The EIR amortisation is included in interest income in the Statement of Profit and Loss. Non-performing financial assets are carried at amortised cost in the financial statement. Financial assets carried at fair value through other comprehensive income (FVOCI) A financial asset is measured at FVOCI if both the following conditions are met: (a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows and selling financial assets (b) The contractual terms of the financial asset meet the SPPI (sole payment of principal and interest) test. FVOCI instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value recognised in OCI. Interest income are recognised in profit or loss in the same manner as for financial assets measured at amortised cost. Investments Investment in mutual funds and security receipts are mandatorily measured at fair value through profit and loss (FVTPL). Investment in equity are measured at fair value to other comprehensive income (FVOCI). Investment in dated Government securities and treasury bills and measured at fair value through amortised cost and they intend to hold till maturity. De-recognition of financial assets The Company derecognizes a financial asset when: a. the contractual rights to the cash flows from the financial asset expire; or b. it transfers the rights to receive the contractual cash flows in a transaction in which either: i. substantially all of the risks and rewards of ownership of the financial asset are transferred; or. 3 Material accounting policies (Contd.)
RkJQdWJsaXNoZXIy NTE5NzY=