Arohan Financial Services Limited | Annual Report 2021-22
154 | Annual Report | 2021-2022 b. The project is technically and commercially feasible c. The company intends to and has sufficient resources to complete the project d. The company has the ability to use or sell such intangible asset e. The asset will generate probable future economic benefits. e) Revenue recognition Interest and processing fee income on loans Interest and processing fee income is recordedon accrual basis using the effective interest rate (EIR) method. Additional overdue interest/ penal charges, if any, are recognised only when it is reasonable certain that the ultimate collection will be made. Income from assignment transactions Income from assignment transactions i.e. present value of excess interest spread is recognised when the related loan assets are de-recognised. Interest income is also recognised on carrying value of assets over the remaining period of such assets. Commission income Income from business correspondent and cross sale services is recognised as and when the services are rendered as per agreed terms and conditions of the contract. Interest on fixed deposits Interest income on deposits with banks is recognized in time proportion basis taking into account the amount outstanding and the rate applicable using the effective interest rate (EIR) method. Dividend income Dividend income is recognised at the time when the right to receive is established by the reporting date. Miscellaneous income All other income is recognised on an accrual basis, when there is no uncertainty in the ultimate realisation/ collection. f) Borrowing costs Borrowing cost consists of interest and other cost that the Company incurred in connection with the borrowing of funds. All other borrowing costs are charged to the Statement of Profit and Loss as incurred basis the effective interest rate method. g) Taxation a) Current tax: Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction either in OCI or directly in other equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation an establishes provisions where appropriate. Arohan Financial Services Limited Summary of significant accounting policies and other explanatory information for the year ended 31 March, 2022 (Contd.)
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