22 / 38
AL MAlAYA HOLDING COMPANY K.S.C. (CLOSED) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(All amounts are in Kuwaiti Dinars)
ii) Cost of revenue
Cost of revenue includes the cost of land and development costs. Development costs include the
cost of infrastructure and construction.
iii) Construction contracts
Revenue from construction contracts is recognized in accordance with the percentage of completion
method of accounting measured by reference to the percentage that actual costs incurred to date
bear to total estimated costs for each contract. Profit is only recognized when the contract reaches a
point where the ultimate profit can be estimated with reasonable certainty. Claims, variation orders
and incentive payments are included in the determination of contract profit when approved by
contract owners. Anticipated losses on contracts are recognized in full as soon as they become
apparent.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is
recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract
costs are recognized as expenses in the period in which they are incurred.
iv) Interest income
Interest income is recognized on a time-proportion basis using the effective interest method. When
a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being
the estimated future cash flow discounted at original effective interest rate of the instrument, and
continues unwinding the discount as interest income. Interest income on impaired loans is
recognized either as cash is collected or on a cost-recovery basis as conditions warrant.
v) Dividend income
Dividend income is recognized when the right to receive payment is established.
vi) Rent income
Rent income is recognized when earned on a time apportionment basis.
vii) Gain on sale of investments
Gain on sale of investments is measured by the difference between the sale proceeds and the
carrying amount of the investment at the date of disposal, and is recognized at the time of the sale.
viii) Management, commission and consultancy income
- Management fees are recognized on accrual basis.
- Commission income and consultancy revenue is recognized at the time the related services are
provided.
u) 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.
20