Page 106 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised if the revision affects only that period, or in the
period of the revision and future periods. Judgments made by management in application of the approved
accounting standards that have significant effect on the financial statements and estimates with a significant
risk of material adjustments in the next year are discussed in respective policy notes. The areas where various
assumptions and estimates are significant to the Company’s financial statements or where judgment was exercised
in application of accounting policies are as follows:

Estimate of useful life of operating fixed assets - note 6.1
Estimated useful life of intangible assets - note 6.3
Impairment of non-financial assets - note 6.4
Stores and spares - note 6.6
Stock-in-trade - note 6.7
Estimation used in right of use asset and corresponding lease liability - note 6.10
Staff retirement benefits - note 6.12
Provisions - note 6.15
Contingencies - note 6.16
Taxation - note 6.20
Impairment of Financial Assets - note 6.25.1

6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6.1 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 - 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 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.

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 - 7.1.

An item of operating fixed asset and any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. The gain or loss
arising on derecognition of an item of operating fixed asset is determined as the difference between the
sales proceeds and the carrying amounts of the asset and is recognized in the statement of profit or loss.

6.2 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.

6.3 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 - 8.1.
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.

104