Page 115 - CCL AR 2017 Final

NRV represents estimated selling prices in the ordinary course of business less the estimated cost of
completion and the estimated cost necessary to make the sale.

3.4 Stock-in-trade

Stock-in-trade is valued at lower of weighted average cost and estimated NRV except for goods-in-transit
which are stated at cost comprising invoice values plus other charges incurred thereon upto the balance
sheet date.

Cost signifies in relation to:
Raw and packing material - Purchase cost on average basis

Finished goods and work-in-process - Cost of direct material, labour and proportion of
manufacturing overheads

Stock-in-transit - Invoice value plus other charges paid thereon up to the
balance sheet date

3.5 Trade debts

Trade debts are recognised at invoice value less provision for uncollectible amounts. Provision for
doubtful debts is based on management’s assessment of customer’s credit worthiness. Bad debts are
written-off when there is no realistic prospect of recovery.

3.6 Trade and other payables
Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to
be paid in future for goods and services received, whether or not billed to the Company.

3.7 Financial instruments
All financial assets and liabilities are recognised at the time when the Company becomes party to the
contractual provisions of the instrument and are de-recognised in case of assets, when the contractual
rights under the instrument are realised, expired or surrendered and in case of a liability, when the
obligation is discharged, cancelled or expired. Any gain / (loss) on the recognition and de-recognition of
the financial assets and liabilities is included in the profit / (loss) for the period in which it arises.

3.8 Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in balance sheet if, and only if, there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle
on a net basis or to realize the assets and settle liabilities simultaneously. Incomes and expenses arising
from such assets and liabilities are also offset accordingly.

3.9 Foreign currency translations
Transactions in foreign currencies are translated into Pak Rupees at the foreign exchange rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated into Pak Rupees at the foreign exchange rate prevailing at that date. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translations
at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the profit and loss account.

3.10 Cash and cash equivalents
These are stated at cost. For the purpose of cash flow statement, cash and cash equivalents comprise of
cash in hand and bank balances.

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