20 / 43
AL MAZA YA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
Mi'lAYA
NM1'OHAD
3.
BASIS OF PREPRA TION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities
as described below. The amount of revenue is not considered to be reliably measurable until all contingencies
relating to the sale have been resolved. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each arrangement.
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 and the significant risks and rewards of ownership of real estate are being transferred from
Group at a single time.
Cost of revenue.
Cost of revenue includes the cost of land and development costs. Development costs include the cost of
infrastructure and construction.
Rental income
Rental income is recognized when earned on a time apportionment basis
Managementfees,
commission and consultancy income
-Managernent fees are recognized on an accrual basis.
-Comrnission and consultancy income are recognized at the time the related services are provided.
Dividend income
Dividend income is recognized when the right to receive payment is established.
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.
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.
18