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AL MAZAYA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
MAZAYA
AIMlOl~AO
3.
BASIS OF PREPRA TION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Leasing (continued)
The Group as lessee (continued)
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as
a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line
basis, except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
Impairment of tangible and intangible assets excluding goodwill
At each consolidated statement of fmancial position date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in the consolidated statement of income, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the
consolidated statement of income, unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Provisions
Classification
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when
the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received
and the amount of the receivable can be measured reliably.
Provision for staff indemnity
The provision for staff indemnity is payable on completion of employment. The provision is calculated in
accordance with applicable labour law based on employees'
salaries and accumulated periods of service or on
the basis of employment contracts, where such contracts provide extra benefits. The provision, which is
unfunded, is determined as the liability that would arise as a result of the involuntary termination of staff at
the consolidated statement of financial position date, on the basis that this computation is a reliable
approximation of the present value of this obligation.
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