71 / 95
ANNUAL REPORT
2015
Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2015
Gain on sale of investments financial assets available for sale
Gain on sale of investment is measured by the difference between the sale proceeds and the carrying amount of investment at the
date of disposal, and is recognised at the time of the sale.
Rental income
Rental income receivable from operating leases except for contingent rental income which is recognised when it arises. Initial
direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same
basis as the lease income.
Dividends income
Dividend income is recognized when the right to receive payment is established, which is generally when shareholders approve
the dividend.
Management fees
Management fees earned for the provision of services over a period of time are accrued over that period.
Finance income
Finance income is recognised as accrued using the effective yield method.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
Group as a lessor
Leases where the Group retains substantially all the risks and benefits of ownership of the asset are classified as operating leases.
Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised
over the lease term on the same basis as rental income.
Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases.
Operating lease payments are recognised as an expense in the consolidated statement of income on a straight-line basis over the
lease term, except for contingent rental payments which are expensed when they arise.
A property interest that is held by the Group under an operating lease may be classified and accounted for as an investment
property when the property otherwise meets the definition of an investment property, evaluated property by property, and based
on management’s intention. The initial cost of a property interest held under a lease and classified as an investment property is
determined at the lower of the fair value of the property and the present value of the minimum lease payments. An equivalent
amount is recognised as a liability.
Borrowing costs
Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly attributable to a project, as
part of projects under construction, over the period of the construction until the project concerned is completed and becomes ready
for its intended use on the basis of actual borrowings and actual expenditure incurred on the project. Capitalisation of borrowing
costs ceases when substantially all activities necessary to prepare the project for its intended use are complete. Borrowing costs
capitalised is calculated using the Group’s weighted average cost of borrowings.
Contingencies
Contingent liabilities are not recognised in the consolidated financial statements, but are disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote.
Contingent assets are not recognised in the consolidated financial statements, but are disclosed when an inflow of economic
benefit is probable.
67