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 115 ANNUAL REPORT 2018 (All amounts are in Kuwaiti Dinars) - Revenue Recognition Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The determination of whether the revenue recognition criteria as specified under IFRS 15 and revenue accounting policy explained in Note (2 - r) are met requires significant judgment. - Determination of contract cost Determination of costs which are directly related to the specific contract or attributable to the contract activity in general requires significant judgment. The determination of contract cost has a significant impact upon revenue recognition in respect of long term contracts. The Group follows guidance of IFRS 15 for determination of contract cost and revenue recognition. - Classification of Land Upon acquisition of land, the Group classifies the land into one of the following categories, based on the intention of the management for the use of the land: a) Properties under development When the intention of the Group is to develop land in order to sell it in the future, both the land and the construction costs are classified as properties under development. b) Work in progress When the intention of the Group is to develop a land in order to rent or to occupy it in the future, both the land and the construction costs are classified as work in progress. c) Properties held for trading When the intention of the Group is to sell land in the ordinary course of business, the land is classified as properties held for trading. d) Investment properties When the intention of the Group is to earn rentals from land or hold land for capital appreciation or if the intention is not determined for land, the land is classified as investment property. - Provision for doubtful debts The determination of the recoverability of the amount due from customers and the factors determining the impairment of the receivable involve significant judgment. The group follow IFRS 9 instructions in calculating this provision. - 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 of 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.