Notes to The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C. (HOLDING) AND ITS SUBSIDIARIES
For the year ended 31 December 2011
32
Borrowing costs
Borrowing costs directly attributable to the construction of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use, are added to the cost of those assets by applying a
capitalisation rate on the expenditure on such assets, until such time as the assets are substantially ready for their intended
use. The capitalisation rate used by the Group is the weighted average of the borrowing costs applicable to the outstanding
borrowings during the period. The remaining borrowing costs are recognised in the consolidated statement of income in
the period in which they are incurred.
Fiduciary assets
Assets held in trust or in a fiduciary capacity are not treated as assets of the Group and accordingly are not included in
these consolidated financial statements but are disclosed in the Notes to the consolidated financial statements.
Kuwait Foundation for the Advancement of Sciences
The Group is legally required to contribute to the Kuwait Foundation for the Advancement of Sciences ("KFAS"). The
Group's contributions to KFAS are recognised as an expense in the period during which the Group's contribution is legally
required.
National Labour Support Tax
The Group is legally required to contribute to the National Labour Support Tax ("NLST"). The Group's contribution to NLST
is recognised as an expense in the period during which the Group's contribution is legally required.
Zakat
Effective 10 December 2007, the Group has provided for Zakat in accordance with the requirements of Law No. 46 of
2006. The Zakat charge calculated in accordance with these requirements is charged to the consolidated statement of
income.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 3, management is required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgements in applying accounting policies
Classification of investments
Management decides on the acquisition of an investment whether to classify it as available for sale or at fair value through
profit or loss. The Group classifies investments as at fair value through profit or loss if it has been acquired principally for
the purpose of selling it in the near term and its fair value can be reliably determined. All other investments are classified
as available for sale.
Impairment of available for sale investments
The Group follows the guidance of IAS 39 to determine when an available-for-sale equity investment is impaired. This
determination requires significant judgment. In making this judgment, the Group evaluates, among other factors, a
significant or prolonged decline in the fair value below its cost The determination of what is "significant" or "prolonged"
requires significant judgment.
