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NOTES TO AND FORMING
PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
208
PAKISTAN OILFIELDS LIMITED
Write-off
The Group write off financial assets, in whole or in part, when it has exhausted all practical
recovery efforts and has concluded 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 Group may write-off financial assets that are still subject to enforcement activity.
Subsequent recoveries of amounts previously written off will result in impairment gains.
4.23 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 Group 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:
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 Group 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. Gain 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 Group derecognises financial liabilities when and only when the Group's obligations are
discharged, cancelled or they expire.
4.24 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position if the Group has a legally enforceable right to setoff the recognized amounts and the Group
intends to settle on a net basis, or realize the asset and settle the liability simultaneously.