Page 156 - Pakistan Oilfield Limited - Annual Report 2022

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PAKISTAN OILFIELDS LIMITED
Notes to and Forming Part of the

Financial Statements

For the year ended June 30, 2022

4.23 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position if the Company has a legally enforceable right to set-off the recognized amounts and there
is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
4.24 Revenue recognition
Revenue is recognised when control of the products has transferred, being when the products are
delivered to the customer, and there is no unfulfilled obligation that could affect the customer's
acceptance of the product. Revenue is recognised as follows:
a) crude oil, upon delivery to customer;
b) natural gas, upon delivery to the customer; and
c) Liquefied Petroleum Gas (LPG), upon delivery to distributors at LPG plant facility.
Revenue is measured at the fair value of the consideration to which the Company expects to be
entitled in exchange for transferring goods/services. Prices of crude oil and gas are calculated
in accordance with Petroleum Concession Agreements / Petroleum Policy / or as notified by the
Government Authorities. Effect of adjustment, if any, arising from revision in sale price is reflected
as and when the prices are finalized with the customers and/or approved by the Government.

Billings are generally raised in the following month which are payable within 30 to 45 days in
accordance with the contractual arrangement with customers.
4.25 Other Income

Income on investments at amortised costs and bank deposits is recognized on time proportion
basis using the effective yield method.

Dividend income is recognized when the right to receive dividend is established.
4.26 Joint arrangements
Investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual right and obligations of the parties to the arrangement. The
Company has assessed the nature of its joint arrangements and determined them to be joint
operations. The Company has recognized its share of assets, liabilities, income and expenditure
jointly held or incurred under the joint operations on the basis of latest available audited accounts
of the joint operations and where applicable, the cost statements received from operators of the
joint arrangements for the intervening period up to the statement of financial position date.

4.27 Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand,
demand deposits and other short term highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of change in value, and
finances under mark up arrangements.

4.28 Dividend distribution
Dividend distribution to the shareholders is accounted for in the period in which dividend is
declared.