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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)
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 recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized 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.
0) Accounts payable
Accounts payable are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method.
p) Wakala and Murabaha payable
Wakala and Murabaha payables represent an agreement whereby the Company takes a certain
amount of cash from another party, and invests it according to specific conditions in return for a
certain fee (percentage of the amount invested). They are subsequently re-measured and carried out
at amortized cost using the effective yield method. Costs of Wakala and Murabaha payable are
expensed on a time proportion basis.
q) Borrowing costs
Borrowings are initially recognized at fair value, which represents the proceeds received, net of
transaction costs incurred. Subsequently, borrowings are stated at amortized cost using the effective
yield method. Any difference between proceeds and the redemption value is recognized in the
consolidated statement of income over the period of the borrowings.
r) End of service indemnity
Provision is made for amounts payable to employees under the Kuwaiti Labor Law in the private
sector and employees' contracts. This liability, which is unfunded, represents the amount payable to
each employee as a result of involuntary termination on the balance sheet date, and approximates
the present value of the final obligation.
s) Treasury shares
Treasury shares consist of the Parent Company's own shares that have been issued, subsequently
reacquired by the Parent Company and not yet reissued or canceled. The treasury shares are
accounted for using the cost method. Under the cost method, the weighted average cost of the
shares reacquired is charged to a contra equity account. When the treasury shares are reissued,
gains are credited to a separate account in shareholders'
equity (treasury shares reserve) which is
not distributable. Any realized losses are charged to the same account to the extent of the credit
balance on that account. Any excess losses are charged to retained earnings then reserves.
Gains realized subsequently on the sale of treasury shares are first used to offset any recorded
losses in the order of reserves, retained earnings and the gain on sale of treasury shares account. No
cash dividends are paid on these shares. The issue of bonus shares increases the number of
treasury shares proportionately and reduces the average cost per share without affecting the total
cost of treasury shares.
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