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AL-MAZAYA HOLDING COMPANY - K.S.C. (PUBLIC)
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
(All amounts are in Kuwaiti Dinars)

If the Group has a contract that is onerous, the present obligation under the contract is recognized and measured
as a provision. However, before a separate provision for an onerous contract is established, the Group recognizes
any impairment loss that has occurred on assets dedicated to that contract.

Provisions are not recognized for future operating losses.

v) Borrowing costs:
Borrowing costs consist of interest, finance cost and other costs that an entity incurs in connection with the
borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended
use or sale. Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are expensed in consolidated statement of profit or loss in the period in which they are
incurred.

w) Leases:

Group as a lessor
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. All other leases are classified as finance leases. The determination of whether an arrangement
is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the
fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys
a right to use the asset.

(i) Finance lease:
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net
investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant
periodic rate of return on the Group’s net investment outstanding in respect of the leases.

(ii) Operating lease:
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognized on a straight-line basis over the lease term.

Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognizes
a lease liability and a corresponding right-of-use asset with respect to all lease arrangements in which it is the
lessee.

(i) Right to use assets:
The Group recognizes right to use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). The cost of right to use assets includes the amount of lease liabilities recognized
(which represents the present value of the lease payments to be made over the lease team discounted using
lessee’s increment borrowing rate at the commencement date of the lease contract), initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received.
Subsequent to initial recognition, the right to use assets is measured in accordance with the accounting policy
followed by the Group to measure similar assets.

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