Consolidated Financial Statements
q) Foreign currency transactions Foreign currency transactions are translated intoSaudi riyal at prevailing exchange rates on transaction date. Monetary assets and liabilities in foreign currencies at balance sheet date are translated into Saudi riyal at the prevailing exchange rates on that date. Gains and losses resulting from fluctuation of exchange rates, which were not significant for 2009 and 2008, are recognized in the consolidated income statement. Assets and liabilities of the consolidated subsidiaries denominated in foreign currencies are converted into Saudi riyal at exchange rates prevailing at the consolidated balance sheet date. Revenues and expenses of the consolidated subsidiaries denominated in foreign currencies are converted into Saudi riyal at average exchange rates during the period. Also the components of shareholders’ equity excluding retained earnings (deficit) are converted applying the exchange rate prevailing at the dates the related items originated. Exchange differences arising from such conversion, if material, are included in a separate line item under shareholders’ equity. r) Zakat and income taxes matter Provision for zakat is computed in accordance with the regulations of Department of Zakat and Income Tax (DZIT) and charged to consolidated income statement based on the higher of zakat base or adjusted net income for each individual company.
Provision is made for withholding tax on payments made to non-resident parties and is charged to the consolidated income statement. For subsidiaries outside the Kingdom of Saudi Arabia, provisions for tax are computed in accordance with the regulations applicable in the respective countries and are charged to consolidated income statement. s) Hedging reserve for loans commission The Company uses commission rate swaps and caps agreements to hedge its long-term loans against fluctuations in market commission rates. Changes in the fair market value of the commission rate swaps that qualifies for hedge accounting are recorded in the hedging reserve which is included in shareholders’ equity; also, the hedging reserve is adjusted based on the periodical valuation of commission rate swaps. t) Earning per share and proposed dividends Earning per share from operating income, other operations and net profit is calculated based on the weighted average number of shares outstanding during the year. Dividends proposed after year end are treated as a part of retained earnings and not as liabilities unless the General Assembly’s approval was before the end of the year. u) Trade accounts receivables Trade accounts receivables are stated at net value after deducting provision for doubtful debts.
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Annual Report 2009 The National Shipping Company of Saudi Arabia
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