AGS Transact Technologies Limited

Annexure V - Basis of preparation and Significant Accounting Policies

Notes to the Revised Restated Consolidated Financial Information

(v) Impairment of financial asset

Expected credit losses are recognised for all financial assets subsequent to initial recognition other than financial
assets in FVTPL category.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant
and available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group's historical experience and informed credit assessment and including forward looking
information.

For trade receivables, the Group applies a simplified approach. It recognises impairment loss allowance based on
lifetime expected credit losses at each reporting date, right from its initial recognition. Trade receivables are tested
for impairment on a specific basis after considering the sanctioned credit limits and expectations about future cash
flows.

The impairment losses and reversals are recognised in Revised Restated Consolidated Statement of Profit and Loss.
Financial liabilities

(i) Initial recognition and measurement

A financial liability is recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially measured at fair value less any directly attributable transaction costs unless at initial
recognition, they are classified as fair value through profit and loss. A financial liability is classified as at FVTPL if
it is held for trading, or it is a derivative or it is designated as such on initial recognition.

(ii) Subsequent measurement

Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are
recognised in Revised Restated Consolidated Statement of Profit and Loss. Other financial liabilities are
subsequently measured at amortised cost using EIR. Interest expense and foreign exchange gains and losses are
recognised in the Revised Restated Consolidated Statement of Profit and Loss.

(iii) Derecognition

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Revised Restated
Consolidated Statement of Assets and Liabilities if there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.

Derivative financial instruments

The Group holds derivative financial instruments (forward contracts) to hedge its foreign currency exposures.

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