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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)
Revenue on sale of apartments and villas is recognized on the basis of percentage completion
based on internal surveys of work performed as and when all the following conditions are met:
• The buyer's investment, to the date of the financial statements, is adequate to demonstrate
a commitment to pay for the property;
• Construction is beyond a preliminary stage. The engineering, design work, construction
contract execution, site clearance and building foundation are finished;
• The buyer is committed. The buyer is unable to require a refund except for non-delivery of
the unit and, in certain cases, in the event of the non-enactment of pending legislation
regarding freehold title and immigration visas. Management believes that the likelihood of
the Group being unable to fulfill its contractual obligations for these reasons is remote; and
• The aggregate sales proceeds and costs can be reasonably estimated.
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 physical percentage of completion. 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.
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