Page 111 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

– the customer simultaneously receives and consumes the benefits provided by the Company’s
performance as the Company performs;

– the Company’s performance creates and enhances an asset that the customer controls as the
Company performs; or

– the Company’s performance does not create an asset with an alternative use to the Company and
the Company has an enforceable right to payment for performance completed to date.

b) Rendering of services
Revenue from a contract to provide services is recognized over time as the services are rendered.

c) Interest income
Interest income is recognized as interest accrues using the effective interest method. This is a
method of calculating the amortized cost of a financial asset and allocating the interest income
over the relevant period using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying
amount of the financial asset.

d) Other revenue
Other revenue is recognized when it is received or when the right to receive payment is established.
6.19 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 in the
period of as and when incurred.

6.20 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, for income covered under Final
Taxation Regime (FTR), taxation is based on the applicable tax rates under such Regime. The charge
for current tax also includes adjustments, where considered necessary, and provision for tax made in
previous years arising from assessments framed during the year for such years.

Deferred
Deferred tax is accounted for using the statement of financial position 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 reporting 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.

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
assets that can be recognized, based upon the likely timing and level of future taxable profits together
with future tax planning strategies.

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