Investor Presentaiton
ANNUAL
REPORT
2018-2019
Notes to the Financial Statements (Continued)
126
ANNUAL
REPORT
2018-2019
Notes to the Financial Statements (Continued)
D
Capital work in progress
E
F
G
Property, plant and equipment that is in the process of construction/acquisition/import is accounted for as capital work
in progress until construction/acquisition/import is completed and measured at cost. Capital work in progress consists
of legal costs incurred for the purchase of land for set-up of factory and warehouse.
Finance income and finance cost
The Company's finance income and finance costs include:
⚫ interest income
⚫interest expense
Interest income is recognised on accrual basis.
Interest expenses comprise interest expense on loans, overdraft, bank charges and other finance related costs. All
borrowing costs are recognised in the statement of profit or loss and other comprehensive income using effective
interest method except to the extent of amounts that are capitalised during construction period of the project in
accordance with IAS 23: Borrowing cost.
Foreign currency transaction
Transactions in foreign currencies are translated to BDT at exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into BDT at the exchange rate at the
reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated
into BDT at the exchange rate when the fair value was determined. Non-monetary items that are measured based on
historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency
differences are generally recognised in profit or loss or statement of comprehensive income.
Income tax
Income tax expenses comprises current and deferred tax. It is recognised in profit and loss except to the extent that
relates to an item recognised directly in equity or in other comprehensive income (OCI).
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax
also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
As per the enacted tax law, applicable tax rate for the Company is currently 25%.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for
financial reporting purpose and the amounts used for taxation purposes. Deferred tax is not recognised for:
a)
b)
Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that effects neither accounting nor taxable profit or loss;
Temporary differences related to investment in subsidiaries and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future; and
H
c)
Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to
the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
i.
Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially
measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing component is initially measured at the transaction price.
ii.
Classification and subsequent measurement
Financial assets - Policy applicable from 1 July 2018
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI
- equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the
first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated at FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both the following conditions and is not designated at FVTPL:
it is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
127View entire presentation