Page 219 - Pakistan Oilfield Limited - Annual Report 2022

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Annual Report 2022

4.25 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 Group 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.

4.26 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.

4.27 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 Group
has assessed the nature of its joint arrangements and determined them to be joint operations. The
Group 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.

4.28 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.
4.29 Dividend distribution

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