Page 71 - Honeywell Annual Report 2021 comm 10 09 v17a.cdr

Notes to the Financial Statements

For the Year Ended 31 March, 2021 cont’d

transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the
financial asset

Financial Liabilities
The Company de-recognizes a financial liability when its contractual obligations are discharged or cancelled, or
expire. The Company also de-recognizes a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial liability based on the modified terms is
recognized at fair value. On de-recognition of a financial liability, the difference between the carrying amount
extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is
recognized in profit or loss.

iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Company currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously. Financial
instruments held by the company are classified in accordance with the provisions of IFRS 9 Financial Instruments.

Trade and Other Receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest rate method, less provision for impairment. The collectability of trade receivables is reviewed on an
ongoing basis. A provision for impairment of trade receivables is established when there is objective evidence that
the Company will not be able to collect all amounts due, according to the original terms of the receivables. The
amount of the provision is the difference between the asset's carrying amount and the present value of
estimated future cash flows. The amount of the provision is recognized in the income statement.

Trade and Other Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payments are due within one year or
less. If not, they are presented as non-current liabilities. Trade payables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method.

Cash and Cash Equivalents
Cash, cash equivalents and bank overdrafts include cash at bank and in hand plus short-term deposits less
overdrafts. Short-term deposits have a maturity of less than three months from the date of acquisition. Bank
overdrafts are repayable on demand and form an integral part of the Company's cash management.

Cash and cash equivalents are stated at carrying amount which is deemed to be fair value.

Borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for
on an accruals basis through the income statement using the effective interest method and are added to the
carrying amount of the instrument to the extent they are not settled in the period in which they arise.

3.9 Research and Development

72 HONEYWELL FLOUR MILLS | ANNUAL REPORT | 2021 World of Possibilities