Page 93 - CA Sri Lanka Integrated Annual Report 2023

5. adequate technical, financial and in acquiring the inventories and bringing 2.1.7 Financial Assets - Initial
other resources to complete them to their existing location and condition. Recognition and Measurement
the development and to use the
software product are available, and The inventories of the Institute include (a) SLFRS 9 Financial Instruments
study packs, study material, publications, SLFRS 9 Financial Instruments
6. the expenditure attributable to stationery and consumables. replaces LKAS 39 on “Financial
the software product during its Instruments: Recognition and
development can be reliably 2.1.6 Impairment of Non-Financial Measurement” for annual periods
measured. Assets beginning on or after 1st January

Directly attributable costs that are The Institute assesses at each reporting 2018, bringing together all three
aspects of the accounting for
capitalised as part of the software date whether there is an indication that an financial instruments: classification
product include the software asset may be impaired. If such an indication and measurement; impairment; and
development employee costs and exists or when annual impairment testing hedge accounting.
an appropriate portion of relevant for an asset is required, the Institute makes
overheads. an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is (b) Financial Assets
Costs recognized as intangible the higher of an asset’s fair value less costs The classification of financial assets
assets are amortised over their to sell and its value in use and determined at initial recognition depends on
estimated useful lives, which do not for an individual asset, unless the asset does the financial asset’s contractual
exceed ten (10) years. Costs relating not generate cash inflows that are largely cash flow characteristics and
to development of software are independent of those from other assets or the Institute’s business model
carried in capital work in progress group of assets. Where the carrying amount for managing them. With the
until the software is ready for use. of an asset exceeds its recoverable amount, exception of trade receivables that
the asset is considered impaired and is do not contain significant financing
b. Study Material written down to its recoverable amount. In components for which the Institute
Costs that are directly attributable assessing value in use, the estimated future has applied the practical expedient,
to the development of curriculum cash flows are discounted to their present the Institute initially measures
and study materials of the CA value, using a discount rate that reflects financial assets at their fair value plus
qualifications are recognised current market assessment of the time value transaction costs. Trade receivables
as intangible assets when it is of money and the risk specific to the asset. that do not contain a significant
technically feasible to implement financing component for which the
the new curriculum, the investment Impairment losses of continuing operations Institute has applied the practical
attributable to the project during are recognised in the statement of expedient are measured at the
its development period can be comprehensive income in those expense transaction price determined under
reliably measured and it can be categories consistent with the function of SLFRS 15.
demonstrated that it will generate the impaired asset.
probable future economic benefits. In order for a financial asset to be
A previously recognised impairment loss classified and measured at amortised
These costs are amortised over the is reversed only if there has been a change cost or fair value through OCI, it
effective period of the curriculum and in the estimates used to determine the needs to give rise to cash flows that
the remaining useful life is reviewed assets recoverable amount, since the are ‘solely payments of principal and
at least at each financial reporting last impairment loss was recognised. If interest’ on the principal amount
year end. that is the case, the carrying amount of outstanding. The Institute’s business
the asset is increased to its recoverable model for managing financial
2.1.5 Inventories amount. The increased amount cannot assets refers to how it manages
“exceed” the carrying amount that would financial assets in order to generate
Inventories are stated at the lower of cost have been determined, net of depreciation, cash flows. The business model
and net realisable value after making due had no impairment loss been recognised determines whether cash flows will
allowances for obsolete and slow-moving for the asset in prior years. Such reversal result from collecting contractual
items. Net realisable value is the estimated is recognised in the statement of cash flows or selling financial assets
selling price in the ordinary course of comprehensive income. or both.
business less the estimated cost of
completion and selling expenses. The cost Financial assets and financial
of inventories is based on weighted average liabilities are offset, and the net
cost. The cost includes expenditure incurred amount is reported in the Statement
of Financial Position, if there is a

CA Sri Lanka Integrated Annual Report 2023 91