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AL MAZAYA HOLDING COMPANY K.S.C. (HOLDING) AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
(All amounts are in Kuwaiti Dinars)
c) Critical accounting judgments, estimates and assumptions
The Group makes judgments, estimates and assumptions concerning the future. The preparation of
the consolidated financial statements in conformity with International 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.
a) 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:
(i) 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 held for trading
When the intention of the Group is either to sell land in the ordinary course of business or to develop
land in order to sell it in the future, both the land and the construction are classified as properties held
for trading.
2) Investment properties
When the intention of the Group is to earn rentals from land, hold land for capital appreciation,
develop land in order to earn rentals or if the intention is not determined for land, the land is classified
as investment property.
3) Fixed assets
When the intention of the Group is to develop a land in order to occupy it in the future, both the land
and the construction costs are classified as work in progress - Fixed assets.
(iv) Provision for doubtful debts
The determination of the recoverability of the amount due from customers and the factors determining
the impairment of the receivable involve significant judgment.
(v) Classification of investments
On acquisition of an investment, the Group classifies its investments as investments available for sale.
The Group follows the guidance of lAS 39 on classifying its investments.
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