Notes to The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C. (HOLDING) AND ITS SUBSIDIARIES
For the year ended 31 December 2011
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If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in the consolidated statement of income, unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in the consolidated statement of income, unless the
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation
increase.
Provisions
Classification
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the
present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
Provision for staff indemnity
The provision for staff indemnity is payable on completion of employment. The provision is calculated in accordance with
applicable labour law based on employees’ salaries and accumulated periods of service or on the basis of employment
contracts, where such contracts provide extra benefits. The provision, which is unfunded, is determined as the liability that
would arise as a result of the involuntary termination of staff at the consolidated statement of financial position date, on
the basis that this computation is a reliable approximation of the present value of this obligation.
Revenue recognition
The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below.
The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been
resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Revenue on sale of properties under development classified under properties held for trading is recognized as follows:
• When the agreement is within the scope of IAS 11 – construction contracts, and its outcome can be estimated reliably,
the Group recognizes the revenue by reference to the stage of completion of the contract activity in accordance with
IAS 11.
• When the agreement is within the scope of IAS 18 – Revenue, Group recognizes revenue at time of completion and
the significant risks and rewards of ownership of real estate are being transferred from Group at a single time.
Cost of revenue
Cost of revenue includes the cost of land and development costs. Development costs include the cost of infrastructure and
construction.
Rental income
Rental income is recognized when earned on a time apportionment basis
