Annual report eng.2019

N otes To The Consolidated Financial Statements AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES As At 31 December 2019 (All amounts are in Kuwaiti Dinars) OF ACHIEVEMENTS Classification of financial assets On acquisition of a financial asset, the Group decides whether it should be classified as "at fair value through profit or loss”, "at fair value through other comprehensive income" or “at amortized cost”. IFRS 9 requires all financial assets, except equity instruments and derivatives, to be assessed based on a combination of the Group’s business model for managing the assets of the instrument’s contractual cash flow characteristics. The Group follows the guidance of IFRS 9 on classifying its financial assets and is explained in Note (2 - d). Business combinations At the time of Group’s acquisition to subsidiaries, the Group considers whether the acquisition represents the acquisition of a business or of an asset (or a group of assets and liabilities). The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the assets. More specifically, consideration is made to the extent of which significant processes are acquired. The significance of processes requires significant judgment. Where the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of an asset (or a group of assets and liabilities). The cost of acquisition is allocated to the assets and liabilities acquired based on their relative fair values, and no goodwill or deferred tax is recognized. Taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Control assessment When determining control over an investee, management considers whether the Group has a ‘de facto’ power to control an investee if it holds less than 50% of the investee’s voting rights. The assessment of the investee’s relevant activities and the ability to use the Group’s power to affect the investee’s variable returns requires significant judgment. Material non-controlling interests The Parent Company’s management considers any non-controlling interests which accounts for 10% or more of the related subsidiary’s equity as material. Disclosures pertaining to those non-controlling interests are set out in (Note 20). Significant influence assessment When determining significant influence over an investee, management considers whether the Group has the power to participate in the financial and operating policy decisions of the investee if it holds less than 20% of the investee’s voting rights. The assessment, which requires significant judgment, involves consideration of the Group’s representation on the investee’s board of directors, participation in policy making decisions and material transactions between the entities. Leases Critical judgements required in the application of IFRS 16 include, among others, the following: • Identifying whether a contract (or part of a contract) includes a lease; • Determining whether it is reasonably certain that an extension or termination option will be exercised; • Classification of lease agreements (when the entity is a lessor); • Determination of whether variable payments are in-substance fixed; • Establishing whether there are multiple leases in an arrangement • Determining the stand-alone selling prices of lease and non-lease components. - - - - - - -