Page 92 - 2596-CA SR Lanka- Annual Report 2022

NOTES TO THE FINANCIAL STATEMENTS

• The Institute has transferred its expected cash flows will include cash purpose of the statement of cash flows,
rights to receive cash flows from flows from the sale of collateral held which has been prepared using the
the asset or has assumed an or other credit enhancements that are 'indirect method'.
obligation to pay the received cash integral to the contractual terms.
flows in full without material delay 2.2 Liabilities and Provisions
to a third party under a ‘pass- For trade receivables, the Institute applies A liability is classified as current when it
through’ arrangement; and either a simplified approach in calculating ECLs. is expected to be settled in the normal
operating cycle; held primarily for the
a) the Institute has transferred 2.1.10 Reclassification purpose of trading, it is due to be settled
substantially all the risks and Financial assets are measured at within twelve months after the reporting
rewards of the asset, or amortised cost as the Management period or there is no unconditional right
intends to hold these instruments to defer the settlement of the liability for
b) the Institute has neither to collect the contractual cash flows at least twelve months after the reporting
transferred nor retained upon completion of the SPPI test and period. The Institute classifies all other
substantially all the risks and evaluating the historical data. As of 01st liabilities as non-current.
rewards of the asset, but has January 2018, the Institute has elected
transferred control of the asset. the business model of hold to collect the 2.2.1 Deferred Income
contractual cash flows and measured the Deferred income results when invoices
When the Institute has transferred instruments at amortized cost. relating to courses and study programmes
its rights to receive cash flows from
an asset or has entered into a pass- Financial assets are not reclassified are raised at the commencement of the
courses where the course delivery take
through arrangement, it evaluates if, subsequent to their initial recognition,
and to what extent, it has retained the except and only in those rare place over a period of several months.
Deferred income is recognized in the
risks and rewards of ownership. When circumstances when the Institute changes
it has neither transferred nor retained its objective of the business model for statement of comprehensive income
to the extent of course delivery taken
substantially all of the risks and rewards managing such financial assets.
of the asset, nor transferred control of place and the balance attributable to the
remaining course period is recognized
the asset, the Institute continues to Consequent to the change in the business
recognise the transferred asset to the model if any, the Institute reclassifies all as a liability on the statement of financial
position until income is recognized.
extent of its continuing involvement. In affected assets prospectively from the
that case, the Institute also recognizes an first day of the next reporting period (the 2.2.2 Provisions
associated liability. The transferred asset reclassification date). Prior periods are not
and the associated liability are measured restated. A provision is recognized in the statement
on a basis that reflects the rights and of financial position, when Institute has a
obligations that the Institute has retained. 2.1.11 Financial Liabilities legal or constructive obligation as a result
of a past event, it is probable that an
All financial liabilities are measured at
Continuing involvement that takes the amortised cost, except for financial outflow of assets will be required to settle
form of a guarantee over the transferred liabilities at fair value through profit or the obligation and the obligation can be
asset is measured at the lower of the loss. The Institute does not have financial measured reliably.
original carrying amount of the asset and liabilities other than payables for the year
the maximum amount of consideration ended 31st December 2022. 2.2.3 Employee Benefits
that the Institute could be required to (a) Employee Defined Benefit Plan -
repay. Gratuity
2.1.12 Cash and Cash Equivalents
Defined benefit plan is a post-
2.1.9 Impairment of Financial Assets The Institute considers cash in hand as employment benefit plan, other
amounts due from banks and short-term
The Institute recognizes an allowance for deposits with an original maturity of three than a defined contribution plan.
expected credit losses (ECLs) for all debt The defined benefit is calculated
instruments measured at amortized cost. months or less to be “Cash and cash by an independent actuary using
equivalents”.
Projected Unit Credit (PUC)
ECLs are based on the difference Cash and cash equivalents comprise cash method. The present value of
between the contractual cash flows due in hand, cash at bank, deposits at bank the defined benefit obligation is
in accordance with the contract and all the and repurchase agreements. determined by discounting the
cash flows that the Institute expects to estimated future cash outflows,
receive, discounted at an approximation Bank overdraft is included as a component using interest rates that are
of the original effective interest rate. The denominated in the currency in
of cash and cash equivalents for the
which the benefits will be paid

90 CA SRI LANKA | Integrated Annual Report 2022