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Inassessing collective impairment, theGroupuses historical informationon the timingof recoveries and the amount
of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses
are likely to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the
estimated future cashflows discounted at the asset’s original effective interest rate. Losses are recognised inprofit or
loss and reflected in an allowance account.
When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts
are written off.
If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, then the previously recognised impairment loss is reversed
through profit or loss.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses which have been
recognized previously in OCI and the accumulated in the fair value reserve to profit or loss. The amount reclassified
is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair
value, less any impairment loss previously recognised in profit or loss.
If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed
through profit or Impairment loss.
losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not
reversed through profit or loss.
Equity-accounted investees
An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount
of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there
has been a favourable change in the estimates used to determine the recoverable amount.
2. Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non‑financial assets (other than biological
assets, investment property, inventories and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annu-
ally for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising
from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the syner-
gies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in
use is based on the estimated future cash flows, discounted to their present value using a pre‑tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.They are allocated first to reduce the carrying amount of any good-
will allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed in the subsequent period. For other assets, an impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined (net of depreciation or amortisation) if no impairment loss had been recognised in previous periods.
P. Provisions
Provisions are determined by discounting the expected future cash flows at a pre‑tax rate that reflects current mar-
ket assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognised as finance cost.
1. Warranties
A provision for warranties is recognised when the underlying products or services are sold, based on historical war-
ranty data and a weighting of possible outcomes against their associated probabilities.
2. Legal claims
The recognition of the provision for legal claims when there are legal claims against the Group and after receiving
appropriate legal advice.
3. Other Provisions
Provisions are recognized when there are other expected claims from third parties with respect to the activities of
the Group and, according to the latest developments and discussions and agreements with those parties.
Q. Leases
1. Financial lease
For leases within the scope of Law 95 of 1995, lease costs including maintenance expense of leased assets are rec-
ognized in income statement in the period incurred. If the Company elects to exercise the purchase option on the
leased asset, the option cost is capitalised 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 incep-
tion 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 obligations, 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.
2. Operational lease
Leasepayments under anoperating lease, excluding any incentives received fromthe lessor over the contract period, shall
be recognizedas anexpense charged to the statement of income for the year ona timepatternbasis andaccruedbase.
106 • 2017 ANNUAL REPORT
2017 ANNUAL REPORT • 107
GB Auto (S.A.E.)
Notes to the consolidated financial statements for the financial year ended December 31, 2017
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)