Consolidated Financial Statements
44
Notes To The Consolidated Financial Statements For the year ended December 31, 2008
2. Significant Accounting Policies
flows, cash and cash equivalents represent cash in hand, bank balances, short-term deposits, and investments that can be liquidated to cash and maturing within three months or less from the date of acquisition which is available to the company without any restrictions. f) Investments 1- Investments in affiliates and others: Investment in affiliates in which the Company has significant influence over the investee’s financial and operation policies, or which the Company owns equity interest ranging between %20 and %50 are accounted for using the equity method. Due to the timing difference between Petredec Ltd. fiscal year and the Company’s fiscal year, the Company’s share in Petredec Ltd. profits or losses are recognized in the Company’s books according to the latest financial statements prepared by Petredec Ltd. The gap period between the latest financial statements prepared by Petredec Ltd. and the date of the Company’s concolidated financial statements is two months. Investments in other companies which are not listed in market and the Company own equity interest of less than 20% is accounted for using the cost method. 2- Investments in government development bonds: Investments in Saudi Government Development Bonds are held to maturity and are stated at adjusted cost by premium or discount. In case of a permanent decline in value, unrealized losses are charged to the consolidated statement of income. in financial instruments represent investments in mutual funds units and investment portfolios managed by local banks, whichwere classified to three categories as follows: Investments held to maturity Certain investments are classified 3- Investments in financial instruments: Investments
a) Accounting convention The consolidated financial statements are prepared in accordance with the standards issued by the Saudi Organization for Certified Public Accountants (SOCPA) and under the historical cost convention, except for the investments in affiliated companies, held for trading and available- for-sale. The Company applies the accrual basis of accounting in recognizing revenues and expenses and on the assumption of the going concern concept. b) Period of financial statements According to the Company’s Articles of Association, the fiscal year of the Company starts on the 1st of January and ends on December 31st of each Gregorian year. c) Consolidated financial statements For the purpose of consolidating accounts, the intercompany transactions and balances were eliminated in the consolidated financial statements. Minority interest of the third party (other partners of the Company in the subsidaries) have also been accounted for in the subsidaries net assets and income. d) Use of estimates The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reported period. Although these estimates are based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates. e) Cash and cash equivalents For the purpose of preparing the consolidated statement of cash
Powered by FlippingBook