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NOTES TO AND FORMING
PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
137
PAKISTANOILFIELDS LIMITED
a) Fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held-for-trading
and financial liabilities designated upon initial recognition as being at fair value through profit or
loss. The Company has not designated any financial liability upon recognition as being at fair value
through profit or loss.
b) Other financial liabilities
After initial recognition, other financial liabilities which are interest bearing subsequently measured
at amortized cost, using the effective interest rate method. Gains and losses are recognized in profit
or loss for the year, when the liabilities are derecognized as well as through effective interest rate
amortisation process.
Derecognition of financial liabilities
The Company derecognises financial liabilities when and only when the Company's obligations are
discharged, cancelled or they expire.
4.23 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position if the Company has a legally enforceable right to setoff the recognized amounts and there
is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
4.24 Revenue recognition
Revenue is recognised when control of the products has transferred, being when the products are
delivered to the customer, and there is no unfulfilled obligation that could affect the customer's
acceptance of the product. Revenue is recognised as follows:
a) Crude oil, upon delivery to customer;
b) Natural gas, upon delivery to the customer; and
c) Liquefied Petroleum Gas (LPG), upon delivery to distributors at LPG plant facility
Revenue is measured at the fair value of the consideration to which the Company expects to be
entitled in exchange for transferring goods/services. Effect of adjustment, if any, arising from
revision in sale price is reflected as and when the prices are finalized with the customers and/or
approved by the Government.
Billings are generally raised in the following month which are payable within 30 to 45 days in
accordance with the contractual arrangement with customers.
Income on investments at amortised costs and bank deposits is recognized on time proportion
basis using the effective yield method.
Dividend income is recognized when the right to receive dividend is established.
4.25 Joint arrangements
Investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual right and obligations of the parties to the arrangement. The Company
has assessed the nature of its joint arrangements and determined them to be joint operations.