Page 186 - Interloop Annual Report 2018-2019

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
operating fixed assets. These are depreciated on reducing balance method at the rate mentioned in the
relevant note.
6.2 Capital work in progress
Capital work in progress is stated at cost less any identified impairment loss and represents direct cost
of material, labour, applicable overheads and borrowing costs on qualifying assets. Transfers are made
to relevant property, plant and equipment category as and when assets are available for its intended
use.
6.3 Leases
Operating leases
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 charged to the income statement on a straight-line basis over the period of lease.
Finance leases
Leases in terms of which the Company has substantially all the risks and rewards of ownership are
classified as finance leases. Assets subject to finance lease are stated at the lower of present value of
minimum lease payments under the lease agreements and the fair value of the assets, less accumulated
depreciation and any identified impairment loss.
The related rental obligations, net of finance costs are classified as current and long term liability
depending upon the timing of the payment.
Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate
on the balance outstanding. The interest element of the rental is charged to statement of profit or loss
over the lease term.
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 8.1. Depreciation of leased assets is charged to
statement of profit or loss.
Residual value and the useful life of an asset are reviewed at least at each financial year-end.
Depreciation on additions to leased assets is charged from the month in which an asset is acquired,
while no depreciation is charged for the month in which the asset is disposed off.
6.4 Intangible asset - Computer software
Interloop Limited Intangible assets are stated at cost less accumulated amortization and any identified accumulated
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FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
impairment loss. These are amortized using the reducing balance method at the rates given in note 9.
Amortization on additions is charged from the month in which an intangible asset is acquired, while no
amortization is charged for the month in which intangible asset is disposed off.
Costs associated with maintaining computer software programme are recognized as an expense as and
when incurred. Costs that are directly attributable to identifiable software and have probable economic
benefits exceeding one year, are recognized as an intangible asset at the time of initial recognition.
Direct costs include the purchase cost of software and related overhead costs.
Expenditure, which enhances or extends the performance of computer software beyond its original
specification and useful life, is recognized as a capital expenditure and added to the cost of the software.
These are amortised on straight line method at the rate mentioned in the relevant note.
6.5 Impairment of non-financial assets
Non financial assets
The carrying amounts of the Company’s non-financial assets, other than stock in trade and stores and
spares, are 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 lives or that are not yet available for use, recoverable amount is estimated at
each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds
its 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.
Impairment losses are recognised in profit and loss. Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other assets of the unit on a pro-rata basis. Impairment
losses on goodwill shall not be reversed.
An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised. Prior impairments of non-financial assets
(other than goodwill) are reviewed for possible reversal at each reporting date.
6.6 Stores and spares
Stores and spares are carried at moving average cost. Provision is made for slow moving and obsolete
store items when so identified. Stores and spares held for capital expenditure are included in capital 2018 - 19
work in progress. Annual Report
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