Page 228 - InterloopAnnualReport2020

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

For the year ended June 30, 2020

7. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
7.1 Operating fixed assets and depreciation
Operating fixed assets, except freehold land which is stated at cost, are stated at cost less accumulated
depreciation and identified accumulated impairment loss, if any. Cost comprises acquisition and other
directly attributable costs.

Depreciation is calculated at the rates stated in note 9.1 applying reducing balance method. The useful life
and residual value of major components of operating fixed assets are reviewed annually to determine that
expectations are not significantly different from the previous estimates. Adjustment in depreciation rate for
current and future 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 disposal. Gain and loss on disposal of fixed assets is included in statement of
profit or loss.

Expenditure, which enhances or extends the performance of operating fixed assets beyond its original
specification and its useful life, is recognized as a capital expenditure and is added to the cost of the
operating fixed assets. These are depreciated on reducing balance method at the rate mentioned in note
9.1.

7.2 Capital work in progress
Capital work in progress is stated at cost less identified impairment loss, if any, 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.

7.3 Intangible assets – Computer software
Intangible assets are stated at cost less accumulated amortization and identified accumulated impairment
loss, if any. These are amortized using the reducing balance method at the rates given in note 10. 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 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 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 amortized on reducing balance method at the rate mentioned in note 10.1.

7.4 Impairment of non–financial assets
The carrying amounts of the group’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 recognized 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.

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