Annual Report 2012 - Lahore Stock Exchange

Financial Notesdeficit is transferred to profit and loss currently. Fair value of quoted investments is their bidprice on Karachi / Lahore Stock Exchange at the balance sheet date. Unquoted investments,where active market does not exist, are carried at cost as it is not possible to apply any othervaluation methodology.Investments intended to be held for less than twelve months from the balance sheet date or to besold to raise operating capital, are included in current assets, all other investments are classifiedas non-current. Management determines the appropriate classification of its investments at thetime of the purchase and re-evaluates such designation on a regular basis.All purchases and sales of investments are recognized on the trade date which is the date thatthe company commits to purchase or sell the investment.Available for sale, investments are tested for impairment at each reporting date. Investments areconsidered to be impaired if there is a significant or prolonged decline in the fair value of theinvestment at the reporting date.5.7 StoresUsable stores are valued at cost (FIFO), while items considered obsolete are carried at nil value.Items in transit are valued at cost comprising invoice value plus other charges paid thereon.5.8 Loans, advances and depositsThese are stated at cost less provisions.5.9 Financial instrumentsa) Initial recognitionAll the financial assets and financial liabilities are recognized at the time when theCompany becomes a party to the contractual provisions of the instrument. At the time ofinitial recognition all financial assets and financial liabilities are measured at cost, whichis the fair value of the consideration given or received for it.b) Derecognition of financial liabilityA financial liability is derecognized when the obligation under the liability is dischargedor cancelled or expires. If an existing financial liability is replaced by another from thesame lender on substantially different terms, or the terms of the existing liability aresubstantially modified, such an exchange or modification is treated as a Derecognition ofthe original liability and the recognition of a new liability, and the difference in therespective carrying amounts is recognized in profit and loss account.5.10 Fees and other receivablesFees and other receivables are stated initially at fair value and subsequently measured atamortized cost using the effective interest rate method if applicable, less provision forimpairment, if any. A provision for impairment is established where there is objective evidencethat the Company will not be able to collect all amounts due according to the original terms ofthe receivables. Trade debts and receivables are written off when considered irrecoverable.112LAHORE STOCK EXCHANGE