Annual report eng.2018

N otes To The Consolidated Financial Statements AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES As At 31 December 2018 112 ANNUAL REPORT 2018 (All amounts are in Kuwaiti Dinars) Other income and expenses Other income and expenses are recognized on an accrual basis. The guidance under IAS 18 which is related to interest income, dividends and gain on sale of investments had been transferred to IFRS 9 without significant changes as mentioned in (Note 2 - d). On the application of the requirements of IFRS 15, the Group had determined that there is no significant impact on the consolidated financial statements as at January 1, 2018, where the revenue recognition for the Group under IAS 18 is not different from IFRS 15. s) Provisions: A provision is recognized when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation. Provisions are not recognized for future operating losses. t) Borrowing costs: 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 recognized in the consolidated statement of profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. u) Leases: The Group has early adopted IFRS 16 only to contracts previously designated as leases. Contracts that have not been designated as leases under IAS 17 have not been revalued. The Group as lessee Previously, the Group classified leases as operating or financing leases based on its assessment if the lease had transferred all the risks and rewards of ownership of the assets to the Group. Under IFRS 16, the Group recognizes lease payments obligations against recognition of an asset representing the lessee's right to use the leased asset during the lease term, with limited exceptions to low-value leased assets and short-term rentals. • Leases classified as operating leases under IAS 17: In the transition period, the lease payments liability is measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing price as of 1 January 2018. Right-of-use asserts are measured at either: 1- The carrying amount as if IFRS 16 was applied from the date of inception, less the use of the incremental borrowing rate of the lessee at the date of initial application. The Group has applied this approach to largest property leases; 2- An amount equal to the lease payments obligations, adjusted by the amount of prepaid or payable rent payments. The Group has applied this method to all other leases. • Leases classified as finance leases under IAS 17: For lease contracts classified as finance leases in accordance with IAS 17, the carrying amount of the right-of-use assets and lease liabilities as at January 1, 2018 is determined at the carrying amount of the lease assets and lease liability under IAS 17 immediately prior to that date.