Page 190 - Interloop Annual Report 2018-2019

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
straight-line basis over the Ijarah term.
6.13 Provisions
Provisions are recognized in the balance sheet when the Company has a present legal or constructive
obligation as a result of past events and it is probable that an outflow of resources will be required to
settle the obligation and a reliable estimate of the amount can be made.
Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
If it is no longer probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, the provisions are reversed.
6.14 Contingencies
The assessment of the contingencies inherently involves the exercise of significant judgment as the
outcome of the future events cannot be predicted with certainty. The company, based on the availability
of the latest information, estimates the value of contingent assets and liabilities which may differ on the
occurrence / non-occurrence of the uncertain future events.
6.15 Taxation
Current
The charge for current taxation is based on taxable income at current rates of taxation after taking into
account tax credits, rebates and exemptions available, if any. However income covered under Final
Taxation Regime (FTR), taxation is based on the applicable tax rates under such Regime after taking into
account tax credits, rebates and exemptions, if any.
Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the financial statements
and the corresponding tax basis used in the computation of taxable income. Deferred tax is calculated
by using the tax rates enacted at the balance sheet date. In this regard, the effect on deferred taxation
of the portion of income subjected to Final Tax Regime is adjusted in accordance with the requirements
of Accounting Technical Release – 27 of the Institute of Chartered Accountants of Pakistan, if considered
material.
Deferred tax liability is recognized for all taxable temporary differences and deferred tax asset is
recognized for all deductible temporary differences and carry forward of unused tax losses and unused
tax credits, if any, to the extent that it is probable that future taxable profit will be available against which
these can be utilized.
Interloop Limited Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit
will be realized. Significant management judgment is required to determine the amount of deferred tax
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FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2019
assets that can be recognized, based upon the likely timing and level of future taxable profits together
with future tax planning strategies.
6.16 Foreign currency translation
All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates
prevailing at the balance sheet date. Transactions in foreign currencies are translated into rupees
at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are translated into rupees at exchange
rates prevailing at the date of transaction. Non-monetary assets and liabilities denominated in foreign
currency that are stated at fair value are translated into rupees at exchange rates prevailing at the date
when fair values are determined. Exchange gains and losses are included in the statement of profit or
loss immediately.
6.17 Government grants
Government grants are recognised when there is reasonable assurance that entity will comply with the
conditions attached to it and grant will be received.
6.18 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time when the assets are substantially ready for
their intended use or sale. All other borrowing costs are charged to statement of profit or loss as and
when incurred.
6.19 Earnings per share
The Company presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is
calculated by dividing the profit by weighted average number of shares outstanding during the period.
Diluted EPS is calculated by adjusting for the effects of all dilutive potential ordinary shares.
6.20 Share capital
Ordinary shares are classified as equity and recognised at their face value.
6.21 Dividend
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s
financial statements in the period in which dividends are approved.
2018 - 19
6.22 Segment reporting Annual Report
Segment reporting is based on the operating (business) segments of the Company. An operating
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