AnnualReport

otes To The Consolidated Financial Statements

AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES

As At 31 December 2016

ANNUAL REPORT

2016

Loans and receivables (continued)

The effective interest rate method amortisation is included in the consolidated statement of income. The losses

arising from impairment are recognised in the consolidated statement of income.

Bank deposit and accounts receivable are classified as “Loan and receivables”.

Financial assets available-for-sale

Financial assets available-for-sale are those non-derivative financial assets that are designated as available-for-

sale or are not classified as loans and receivables. After initial recognition at cost including transaction costs

associated with the acquisition, financial assets whose fair value cannot be reliably measured are carried at

cost less impairment losses, if any.

After initial recognition, financial assets available-for-sale are subsequently measured at fair value with

unrealised gains or losses recognised as cumulative changes in fair values in other comprehensive income

until the investment is derecognised or determined to be impaired, at which time the cumulative gain or

loss is removed from the cumulative changes in fair values and recognised in the consolidated statement of

income. Financial assets whose fair value cannot be reliably measured are stated as cost less impairment

losses, if any.

Derecognition

A financial asset (or, where applicable a part of financial asset or part of a Group of similar financial assets)

is derecognised when:

• The rights to receive the cash flows from the asset have expired;

• The Group has transferred its right to receive cash flows from the asset or has assumed an obligation to pay

the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement;

and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group

has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred

control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into pass-through

arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor

transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement

in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the

associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower

of the original carrying amount of the asset and the maximum amount of consideration that the Group could

be required to repay.

(ii) Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a

group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired

if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred

after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the

estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the borrowers or a group of borrowers is experiencing

significant financial difficulty, default or delinquency in interest or principal payments, the probability that

they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is

a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions

that correlate with defaults.