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AL MAZAY A HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
MAZAYA
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t,AI)
4.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY (CONTINUED)
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
the "value in use" of the asset or the cash-generating unit to which the goodwill is allocated. Estimating a value
in use requires the Group to make an estimate of the expected future cash-flows from the asset or the cash-
generating unit and also choose an appropriate discount rate in order to calculate the present-value of the cash-
flows.
Provision for doubtful debts
The extent of provision for doubtful debts involves estimation process. Provision for doubtful debts is made
when there is an objective evidence that the Group will not be able to collect the debts. Bad debts are written
off when identified. The benchmarks for determining the amount of provision or write-down include analysis,
technical assessment and subsequent events. The provisions and write-down of receivables are subject to
management approval.
Revaluation of investment properties and properties held for sale
The Group carries its investment properties at fair value, with changes in fair value being recognized
in
the
consolidated statement of income. The Group engaged an independent valuation specialist to determine fair
value as at 31 December 2011. For the investment property the evaluator used a valuation technique based on a
discounted cash flow model as there is a lack of comparable market data because of the nature of the property.
The determined fair value of the investment properties is most sensitive to the estimated yield as well as the
long term vacancy rate.
5.
REST ATEMENT
During the year, Group's management discovered that the method of calculating the income based on
percentage of completion method from certain properties under development, classified as held for trading, was
incorrect. This was based on certain items specified in the contracts for the sale of these properties and laws
governing real estate in the jurisdiction where the Group builds and sells these properties. These regulations
indicate that the transfer of risks and rewards associated with ownership of properties may cease due to
cancellation of sale contracts to customers,
Consequently, the Group has reassessed the revenues recognised based on percentage of completion method
instead of completed contract basis for the years 2008 to 2010 in compliance with lAS 18, in order to make the
revenue recognition consistent with the transfer of risk and rewards to the buyer. The comparative figures in
these financial statements have been restated as follows:
31 December
31 December
31 December
2010
31 December
2009
2010
(as reported
2009
(as reported
(restated)
QreviouslJ:)
(restated)
previously)
KD
KD
KD
KD
Consolidated statement of
financial position
Properties held for trading
113,402,965
138,972,881
102,844,733
Investment in joint ventures
11,054,413
11,525,814
11,737,667
Investment properties
116,921,489
115,374,019
101,852,535
Advances from customers
77,593,436
69,981,443
71,642,501
(Accumulated losses )/retained
earrungs
(42,263,121)
(8,609,811)
(26,721,665)
Equity attributable to
shareholders of the Parent
Company
82,054,291
115,707,601
93,186,292
126,122,141
11,790,446
100,232,287
64,030,508
4,220,515
124,128,472
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