| 132 Annual Report | 2023-2024 Financials Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2024 (Contd.) d) Intangible assets Recognition and initial measurement Intangible assets are stated at their cost of acquisition. The cost comprises purchase price including any import duties and other taxes (other than those subsequently recoverable from taxation authorities), borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent measurement (depreciation method, useful lives and residual value) Intangible assets are amortised over a period of five years from the date when the assets are available for use. The estimated useful life (amortisation period) of the intangible assets is arrived basis the expected pattern of consumption of economic benefits and is reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any. Intangible assets under development Intangible assets under development represents expenditure incurred in respect of intangible assets under development and are carried at cost. Cost includes development cost, borrowing costs and other direct expenditure necessary to create, produce and repair the asset to be capable of operating in the manner intended by management. These are recognised as assets when the company demonstrate following recognition requirements: a. The development costs can be measured reliably 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 recorded on 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 insurance corporate agency 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
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