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AL-MAZAYA HOLDING COMPANY - K.S.C. (PUBLIC)
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(All amounts are in Kuwaiti Dinar)

Measurement of the expected credit losses is determined by a probability-weighted estimate of
credit losses over the expected life of the financial instrument. ECLs for financial assets measured
at amortized cost are deducted from the gross carrying amount of the assets and charged to
consolidated statement of profit or loss. For debt instruments at FVOCI, the loss allowance is
charged to consolidated statement of profit or loss and is recognized in OCI.

The Group considers a financial asset in default when contractual payments are 30 days past
due. However, in certain cases, the Group may also consider a financial asset to be in default
when internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.

d – 2) Financial liabilities:
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. All financial liabilities are subsequently measured
at FVTPL or at amortized cost using effective interest rate method.

Financial liabilities at amortized cost
Financial liabilities that are not at FVTPL as above are measured subsequently at amortized cost using
the effective interest method.

 Accounts payable
Accounts payable include trade and other payables. Trade payables are obligations to pay for goods
or services that have been acquired in the ordinary course of business from suppliers. Trade payables
are recognized initially at fair value and subsequently measured at amortized cost using the effective
return method. Accounts payable are classified as current liabilities if payment is due within one year
or less (or in the normal operating cycle of the business if longer). If not, they are presented as non -
current liabilities.

 Borrowing:
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognized in the consolidated statement of profit or loss over the period
of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services
and amortized over the period of the facility to which it relates.

 Islamic bank facilities
Islamic bank facilities represent tawarruq, ijara and musharaka facilities which represent the amounts
due to pay for purchased assets on deferred basis as per the credit facility agreements. Their balances
are reported with full credit balances after deducting finance charges amounts pertaining to future
periods. Those finance charges are amortized on a time apportionment basis using effective cost
method.

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