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ANNUAL REPORT
2015
Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2015
Derecognition of financial assets and financial liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or a group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired;
• the Group has transferred its rights 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.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in the consolidated statement
of income.
Offsetting of financial instruments
Financial assets and liabilities are offset and net amount is reported in the consolidated statement of financial position when the
Group has currently legal enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the
liability simultaneously.
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.
Financial assets available for sale
For financial assets available for sale, the Group assess at each reporting date whether there is objective evidence that a financial
asset available for sale or a group of financial assets available for sale is impaired. In the case of equity investments classified as
available for sale, objective evidence would include a significant or prolonged decline in the fair value of the equity investment
below its cost. ‘Significant’ is evaluated against the original cost of investment and ‘prolonged’ against the period in which
fair value has been below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on those financial assets available for sale
previously recognised in the consolidated statement of income is removed from other comprehensive income and recognised in
the consolidated statement of income.
Impairment losses in equity investments are not reversed through consolidated statement of income; subsequent increase in their
fair value after impairment is recognized directly in other comprehensive income.
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