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NOTES TO AND FORMING
PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
131
PAKISTANOILFIELDS LIMITED
4.14 Investments in subsidiary and associated companies
These are carried at cost less impairment losses. The profits and losses of the subsidiary and
associated companies are carried forward in the financial statements of the subsidiary and
associated companies and not dealt within or for the purpose of these financial statements except
to the extent of dividend declared by the subsidiary and associated companies. Gain and loss on
disposal of investment is included in income currently.
4.15 Stores and spares
Stores and spares are valued at cost determined on moving average formula less allowance for
obsolete items. Stores in transit are stated at invoice value plus other charges paid thereon.
4.16 Stock in trade
Stocks are valued at the lower of average annual cost (including appropriate production overheads)
and net realizable value. Net realizable value is determined on the basis of estimated selling price of
the product in the ordinary course of business less costs necessary to be incurred for its sale.
4.17 Impairment of non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to depreciation and are
tested annually for impairment. Assets that are subject to depreciation are reviewed for impairment
at each statement of financial position date, or wherever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount for which the asset's carrying amount exceeds its recoverable amount. An asset's
recoverable amount is the higher of its fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows. Non-financial assets that suffered an impairment are reviewed for possible
reversal of the impairment at each statement of financial position date. Reversals of the impairment
loss are restricted to the extent that asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if no new impairment loss
had been recognized. An impairment loss or reversal of impairment loss is recognized in income
for the year.
4.18 Trade debts and other receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of
business. If collection is expected in one year or less, they are classified as current assets. If not, they
are presented as non-current assets.
Trade receivables are recognised initially at the amount of consideration that is unconditional,
unless they contain significant financing components when they are recognised at fair value. They
are subsequently measured at amortised cost using the effective interest rate method, less loss
allowance. Refer note 4.21 for a description of the Company's impairment policies.
4.19 Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when
the Company becomes a party to the contractual provisions of the instrument. All the financial
assets are derecognized at the time when the Company losses control of the contractual rights