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NOTES TO AND FORMING
PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
136
PAKISTANOILFIELDS LIMITED
Where lifetime ECL is measured on a collective basis to cater for cases where evidence
of significant increases in credit risk at the individual instrument level may not yet be
available, the financial instruments are grouped on the following basis:
- Nature of financial instruments;
- Past-due status;
- Nature, size and industry of debtors; and
- External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of each
group continue to share similar credit risk characteristics.
Recognition of loss allowance
The Company recognizes an impairment gain or loss in the statement of profit or loss
for all financial instruments with a corresponding adjustment to their carrying amount
through a loss allowance account, except for investments in debt instruments that are
measured at FVTOCI, for which the loss allowance is recognised in other comprehensive
income and accumulated in the investment revaluation reserve, and does not reduce the
carrying amount of the financial asset in the statement of financial position.
Write-off
The Company write off financial assets, in whole or in part, when it has exhausted all
practical recovery efforts and has concluded that there is no reasonable expectation
of recovery. The assessment of no reasonable expectation of recovery is based on
unavailability of debtor’s sources of income or assets to generate sufficient future cash
flows to repay the amount.
The Company may write-off financial assets that are still subject to enforcement activity.
Subsequent recoveries of amounts previously written off will result in impairment gains.
4.22 Financial Liabilities
Classification, initial recognition and subsequent measurement
Financial liabilities are classified in the following categories:
-
fair value through profit or loss; and
-
other financial liabilities.
The Company determines the classification of its financial liabilities at initial recognition. All financial
liabilities are recognized initially at fair value and, in case of other financial liabilities also include
directly attributable transaction costs. The subsequent measurement of financial liabilities depends
on their classification, as follows: