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AL MAZAYA HOLDING COMPANY K.S.C. (CLOSED) AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008
(All amounts are in Kuwaiti Dinars)
c) Recognition/ derecognition of financial assets and financial liabilities
A financial asset or a financial liability is recognized when the Group becomes a party to the
contractual provisions of the instrument. Financial asset (in whole or in part) is de-recognized when
the contractual rights to the cash flows from the financial asset expire or when the group transfers
substantially all the risks and rewards of ownership or when the group has neither transferred or
retained substantially all the risks and rewards of ownership and when it no longer has control over
the asset or a proportion of the assets. A financial liability is derecognized when the obligation
specified in the contract is discharged, cancelled or expired.
d) Critical accounting estimates and judgments
The Group makes judgments, estimates and assumptions concerning the future. The preparation of
consolidated financial statements in conformity with Intemational Financial Reporting Standards
requires management to make judgments, estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenue and expenses during the year.
Actual results could differ from the estimates.
al
Judgments
In the process of applying the Group's accounting policies which are described in note 2,
management has made the following judgments that have the most significant effect on the amounts
recognized in the consolidated financial statements.
(il Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. The determination of whether the revenue recognition
criteria as specified under lAS 18 are met requires significant judgment.
(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 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 or to occupy it in the future,
both the land and the construction costs are classified as work in progress.
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