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NOTES TO AND FORMING
PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
132
PAKISTANOILFIELDS LIMITED
that comprise the financial assets. All financial liabilities are derecognized at the time when they
are extinguished that is, when the obligation specified in the contract is discharged, cancelled,
or expired. Any gains or losses on derecognition of the financial assets and financial liabilities are
taken to the statement of profit or loss.
4.20 Financial assets
Classification
The Company classifies its financial assets in the following measurement categories:
(i) Amortised cost where the effective interest rate method will apply;
(ii) Fair value through profit or loss (FVTPL); and
(iii) Fair value through other comprehensive income (FVTOCI)
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income (OCI). For investments in equity instruments that are not held for trading,
this will depend on whether the Company has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair value through other comprehensive income
(FVTOCI).
The Company reclassifies debt investments when and only when its business model for managing
those assets changes.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which
the Company commits to purchase or sell the asset. Further, financial assets are derecognised when
the rights to receive cash flows from the financial assets have expired or have been transferred and
the Company has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a
financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVTPL are expensed in statement of
profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for
managing the asset and the cash flow characteristics of the asset. There are three measurement
categories into which the Company can classify its debt instruments: