Basic HTML Version
GB Auto and its Subsidiaries (S.A.E)
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
(In the notes all amounts are shown in thousand Egyptian pounds unless otherwise stated)
59
GB Auto
•
2012 ANNUAL REPORT
Unquoted investments in equity instruments (have no market value in active market) are recognized at its acquisition cost, if its fair
value could not be accurately determined through acceptable evaluation method. The carrying amount is decreased by any impair-
ment which is charged to the statement of income per each investment.
I. Lease
Finance lease
For leases within the scope of Law 95 of 1995, lease costs including maintenance expense of leased assets are recognized in income
statement in the year incurred. If the Company elects to exercise the purchase option on the leased asset, the option cost is capital-
ised as property, plant, and equipment and depreciated over their expected remaining useful lives on a basis consistent with similar
assets.
Other finance leases that do not fall under the scope of Law 95 for 1995, or fall within the scope of Law 95 of 1995 but do not fall
under the scope of EAS No.20 (Accounting Principles and Standards Attributable to Finance Lease) also in case the company will
sale property, plant and equipment and leasing it back the asset is capitalized at the inception of the lease at the lower of the fair value
of the leased asset or the present value of the minimum lease payments. Each lease payment is allocated between the liability and
finance charges so as to achieve a constant rate of interest charge on the outstanding finance cost balance. The finance lease obliga-
tions, net of finance charges, are classified as liabilities. The interest element of the finance cost is charged to the income statement
over the lease period so as to produce a constant rate of interest over the remaining balance of the liability for each period. Assets
acquired under this type of finance lease are depreciated over the shorter of the useful life of the assets or the lease term.
Gains arising from the excess of the collected payments over the book value of the non-current assets that are being sold and leased
back through finance leases are deferred and amortized over the lease term and charged directly to the income statement.
Operating lease
Lease payments under an operating lease (excluding any incentives received from the lessor over the contract period) shall be recog-
nized as an expense charged to the statement of income for the year on a time pattern basis and accrued base.
J. Investment property
Investment property is measured at fair value. The fair value is the value of which the property could be traded between knowledge-
able and willing parties in an arm’s length transaction. Any gain or loss arising from a change in the fair value of investment prop-
erty is recognized in the income statement in the same year of change. The fair value of the investment property is reviewed at each
balance sheet date based on the market value which is determined by independent expert.
K. Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined by the weighted average method. The cost of
finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads
(based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
L. Financial assets
(i) Classification
The Group classifies its financial assets based on the purpose for which the financial assets were acquired at initial recognition as following.
•
Financial assets at fair value through profit or loss.
•
Held to maturity.
•
Loans and receivables.
•
Available-for-sale financial assets.
a.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short-term.
Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified
as current assets.