MS AR 2018 (1)

5.2 Intangible asset
This is stated at cost less accumulated amortisation and impairment losses, if any. Costs associated with
maintaining the asset are charged to the statement of profit or loss as and when incurred, however, costs that
are directly attributable to the identifiable asset and have probable economic benefits exceeding one year, are
recognised as intangible asset. Intangible asset is estimated to have definite useful live and is amortised from
the month it is acquired or made available for use, using the straight line method at the rate of 20%. Intangible
asset is reviewed at each reporting date to identify circumstances indicating occurrence of impairment loss or
reversal of pervious impairment losses, if any. If any such indications exist, an estimate of the recoverable amount
is calculated and impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in
use. Reversal of impairment loss is restricted to the original cost of the asset.
5.3 Stores, spares and loose tools
Stores, spares and loose tools are valued at cost less provision if any. The cost is determined using the weighted
average method. Cost comprises invoice value plus other charges incurred thereon. Provision is made in the
financial statements for slow moving and obsolete stores, spares and loose tools based on management’s
best estimate regarding their future usability whenever necessary and is recognised in the statement of profit or
loss.
5.4 Stock-in-trade
These are valued at lower of cost and net realizable value. Cost is determined as follows:
Raw material
- Externally purchased at weighted average cost
- Internally manufactured at weighted average cost
Finished goods
at estimated manufacturing cost
In-transit
at invoice value plus charges incurred thereon
Wastage
at estimated manufacturing cost
Cost in respect of raw material comprises of following:
- Externally purchased Invoice value plus other charges incurred thereon
- Internally manufactured Estimated manufacturing cost
Estimated manufacturing cost consists of material, labour and other attributable overheads.
Net realizable value of raw material inventory is determined on the basis of replacement cost. Net realizable value
of finished goods signifies the estimated selling price in the ordinary course of business less cost necessary to
be incurred for its sale.
Costs of raw material inventories held for use in production of finished goods is not written down below cost, if
the finished product for which it will be consumed is expected to be sold at or above cost.
The Company reviews the carrying amount of stock-in-trade on a regular basis and as appropriate, inventory
is written down to its net realizable value or provision is made for obsolescence if there is any change in usage
pattern and / or physical form of related inventory.
5.6 Foreign currency transactions
Transactions in foreign currencies are translated to Pakistani Rupees at the foreign exchange rates prevailing on
the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pakistani Rupees
at the rates of exchange approximating those at the statement of financial position date. Exchange gains / losses
resulting from the settlement of transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are taken to the statement of profit or loss.
Annual Report 2018
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