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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)
Realized and unrealized gains and losses from investments at fair value through income statement
are included in the consolidated statement of income. Unrealized gains and losses arising from
changes in the fair value of investments available for sale are recognized in cumulative changes in
fair value in consolidated statement of changes in equity.
Where investments available for sale could not be measured reliably, these are stated at cost less
impairment losses, if any.
When an investment available for sale is disposed off or impaired, any prior fair value earlier reported
in equity is transferred to the consolidated statement of income.
An investment (in whole or in part) is derecognized either when: the contractual rights to receive the
cash flows from the investment have expired; or the Group has transferred its rights to receive cash
flows from the investment and either (a) has transferred substantially all the risks and rewards of
ownership of the investment, or (b) has neither transferred nor retained substantially all the risks and
rewards of the investment, but has transferred control of the investment. Where the Group has
retained control, it shall continue to recognize the investment to the extent of its continuing
involvement in the investment.
The Group assesses at each balance sheet date whether there is an objective evidence that a
financial asset or a group of financial assets is impaired. In the case of equity securities classified as
available for sale, a significant or prolonged decline in the fair value of the security below its cost is
considered in determining whether the securities are impaired. If any such evidence exists for
investments available for sale, the cumulative loss - measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that investment previously
recognized in profit or loss - is removed from equity and recognized in the consolidated statement of
income. Impairment losses recognized in the consolidated statement of income on available for sale
equity instruments are not reversed through the consolidated statement of income.
g) Receivables
Receivables are recognized initially at fair value and subsequently measured at amortized cost using
the effective interest method, less provision for impairment. A provision for impairment of trade
receivables is established when there is objective evidence that the Group will not be able to collect
ali amounts due according to the original terms of the receivables. Significant financial difficulties of
the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount
of the provision is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. The carrying amount of
the asset is reduced through the use of an allowance account, and the amount of the loss is
recognized in the consolidated statement of income within "selling and marketing costs/general and
administration expense". When a trade receivable is uncollectible, it is written off against the
allowance account for trade receivables. Subsequent recoveries of amounts previously written off are
credited in the consolidated statement of income.
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