Page 107 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

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 the relevant note.

6.3.1 Development costs
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Company are recognized as development cost in intangible assets.
Directly attributable costs that are capitalized as part of the software includes advance payments for the
software. Capitalized development costs are recorded as intangible assets and amortized from the point
at which the asset is ready for use.

6.4 Impairment of 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 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.

Impairment losses are recognized in profit or loss. Impairment losses recognized 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
amortization, if no impairment loss had been recognized. Prior impairments of non-financial assets are
reviewed for possible reversal at each reporting date.

6.5 Investment in subsidiary and associates
Investments in subsidiary and associates are recognized at cost less impairment loss, if any. At each
reporting date, the recoverable amounts are estimated to determine the extent of impairment losses, if
any, and carrying amounts of investments are adjusted accordingly. Impairment losses are recognized as
expense. Where impairment losses subsequently reverse, the carrying amounts of the investments are
increased to the revised recoverable amounts but limited to the extent of initial cost of investments. A
reversal of impairment loss is recognized in the statement of profit or loss.

The profits and losses of subsidiary and associated entities are carried forward in their financial
statements and not dealt within these financial statements except to the extent of dividend declared
by the subsidiary and associates. Gains and losses on disposal of investments are included in other
income.

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
work in progress.

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