Page 115 - Interloop Annual Report 2018-2019

NOTES TO THE UNCONSOLIDATED NOTES TO THE UNCONSOLIDATED

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

• Impairment of non-financial assets - note 5.5 finance leases. Assets subject to finance lease are stated at the lower of present value of minimum lease payments
• Stores and spares - note 5.6 under the lease agreements and the fair value of the assets, less accumulated depreciation and any identified
• Stock-in-trade - note 5.7 impairment loss.
• Staff retirement benefits - note 5.10
• Provisions - note 5.13 The related rental obligations, net of finance costs are classified as current and long term liability depending upon
• Contingencies - note 5.14 the timing of the payment.
• Taxation - note 5.15
Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES balance outstanding. The interest element of the rental is charged to statement of profit or loss over the lease term.

5.1 Operating fixed assets and depreciation Assets acquired under a finance lease are depreciated over the estimated useful life of the asset on a reducing
balance method at the rates given in note 7.1. Depreciation of leased assets is charged to statement of profit or
Operating fixed assets, except freehold land which is stated at cost, are stated at cost less accumulated depreciation loss.
and any identified accumulated impairment loss. Cost comprises acquisition and other directly attributable costs.
Residual value and the useful life of an asset are reviewed at least at each financial year-end.
Depreciation is calculated at the rates stated in note 7.1 applying reducing balance method. The useful life and
residual value of major components of operating fixed assets are reviewed annually to determine that expectations Depreciation on additions to leased assets is charged from the month in which an asset is acquired, while no
are not significantly different from the previous estimates. Adjustment in depreciation rate for current and future depreciation is charged for the month in which the asset is disposed off.
periods is made if expectations are significantly different from the previous estimates. Depreciation is charged
from the month when an asset becomes available for use, whereas no depreciation is charged in the month of its 5.4 Intangible asset - Computer software
disposal. Gain and loss on disposal of fixed assets is included in statement of profit or loss.
Intangible assets are stated at cost less accumulated amortization and any identified accumulated impairment loss.
Expenditure, which enhances or extends the performance of operating fixed assets beyond its original specification These are amortized using the reducing balance method at the rates given in note 8. Amortization on additions is
and its useful life, is recognized as a capital expenditure and is added to the cost of the operating fixed assets. charged from the month in which an intangible asset is acquired, while no amortization is charged for the month in
These are depreciated on reducing balance method at the rate mentioned in the relevant note. which intangible asset is disposed off.

5.2 Capital work in progress Costs associated with maintaining computer software program are recognized as an expense as and when incurred.
Costs that are directly attributable to identifiable software and have probable economic benefits exceeding one
Capital work in progress is stated at cost less any identified impairment loss and represents direct cost of material, year, are recognized as an intangible asset at the time of initial recognition. Direct costs include the purchase cost
labour, applicable overheads and borrowing costs on qualifying assets. Transfers are made to relevant property, of software and related overhead costs.
plant and equipment category as and when assets are available for its intended use.
Expenditure, which enhances or extends the performance of computer software beyond its original specification
5.3 Leases and useful life, is recognized as a capital expenditure and added to the cost of the software. These are amortized
on reducing balance method at the rate mentioned in the relevant note.
Operating leases
5.5 Impairment of non-financial assets
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are The carrying amounts of the Company’s non-financial assets, other than stock in trade and stores and spares, are
charged to the income statement on a straight-line basis over the period of lease. reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite 2018 - 19
lives or that are not yet available for use, recoverable amount is estimated at each reporting date.
Finance leases
Interloop Limited Leases in terms of which the Company has substantially all the risks and rewards of ownership are classified as An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its Annual Report
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that
largely are independent from other assets and groups.

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