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AL MAlAYA HOLDING COMPANY KS.C. (HOLDING) AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
(All amounts are in Kuwaiti Dinars)
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 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 receivables 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) Rental income
Rental income is recognized when eamed 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 an accrual basis.
- Commission income and consultancy revenue are recognized at the time the related services are
provided.
y) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use
or sale, are added to the cost of those assets, until such time as the assets are substantially ready for
their intended use or sale. Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs
eligible for capitalization.
All other borrowing costs are recognized in the consolidated statement of income in the year in which
they are incurred.
z) 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 but are disclosed in the Notes to the
consolidated financial statements.
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