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AL MAZAYA HOLDING COMPANY
K.S.C.
(CLOSED) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(All amounts are in Kuwaiti Dinars)
(ii) Determination of contract cost
Determination of costs which are directly related to the specific contract or attributable to the contract
activity in general requires significant judgment. The determination of contract cost has a significant
impact upon revenue recognition in respect of long term contracts. The Group follows guidance of
lAS 11 for determination of contract cost and revenue recognition.
(iii) Classification of land
Upon acquisition of a land, the Group classifies the land into one of the following categories, based
on the intention of the management for the use of the land:
1) Properties under development
When the intention of the Group is to develop land in order to sell it in the future, both the land
and the construction costs are classified as properties under development.
2) Work in progress
When the intention of the Group is to develop a land in order to rent it in the future, both the land
and the construction costs are classified as work in progress.
3) Properties held for sale
When the intention of the Group is to sell land in the ordinary course of business, the properties
are classified as properties held for sale.
4) Investment property
When the intention of the Group is to earn rentals from land or hold land for capital appreciation
or if the intention is not determined for land, the land is classified as investment property.
(iv) Provision for doubtful debts
The determination of the recoverability of the amount due from customers and the factors determining
the impairment of the receivable involve significant judgment.
(v) Classification of investments
On acquisition of an investment, the Group decides whether it should be classified as "at fair value
through statement of income" or "available for sale". The Group follows the guidance of lAS 39 on
classifying its investments.
The Group classifies investments as "at fair value through income statement" if they are acquired
primarily for the purpose of short term profit making or if they are designated at fair value through
statement of income at inception, provided their fair values can be reliably estimated. All other
investments are classified as "available for sale".
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