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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)
i) Sale of properties:
Revenue on sale of properties under development classified under properties held for trading is
recognized as follows:
• When the agreement is within the scope of lAS 11 - construction contracts, and its outcome
can be estimated reliably, the Group recognizes the revenue by reference to the stage of
completion of the contract activity in accordance with lAS 11.
• When the agreement is within the scope of lAS 18 - Revenue, Group recognizes revenue at
time of completion. When the significant risks and rewards of ownership of real estate are
being transferred from Group at a single time.
If there is a doubt about the future economic benefits flowing to the Group, the Group recognizes
revenue based on the installment percentage.
Revenue on sale of plots of land is recognized on the basis of the full accrual method as and
when all of the following conditions are met:
• A sale is consummated and contracts are signed;
• The buyer's investment, to the date of the consolidated financial statements, is adequate to
demonstrate a commitment to pay for the property;
• The Group's receivable is not subject to future subordination;
• The Group has transferred to the buyer the usual risks and rewards of ownership in a
transaction that is in substance a sale and does not have a substantial continuing
involvement with the property; and
• Work to be completed is either easily measurable and accrued or is not significant in relation
to the overall value of the contract.
If all except for the last criterion listed above are fulfilled, the percentage of completion method is
adopted to recognize revenue.
The risk of the purchaser being able to rescind the contract for reasons stated in the contract which
are dependent on the enactment of pending legislation and therefore outside the Group's control is
considered by management to be remote.
Revenue on sale of apartments and villas is recognized on the basis of percentage of 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 consolidated 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.
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