Consolidated Financial Statements
3- Investments in financial instruments: Investments in financial instruments represent investments in mutual funds units and investment portfolios managed by local banks, which were classified into three categories as follows: ● Investments held to maturity Certain investments in financial instruments are classified as held to maturity based on the Company’s management intention. These investments are stated at cost adjusted by premium or discount, if any. ● Investments held for trading Certain investments in financial instruments are classified as held for trading based on the Company’s management intention. These investments are stated at fair value. Unrealized gains or losses are recorded in the consolidated income statement. ● Investments available for sale Certain investments are classified as available for sale when the conditions of classification as investments held to maturity or for trading are not met. The available for sale investments are stated at fair value. Unrealized gains or losses are recognized under shareholders’ equity, whereas the realized gains or losses from the redemptions of units are recognized in the consolidated income statement in the period in which these units are redeemed. If there is a permanent decline in the value of these investments or an objective evidence for impairment, the unrealized loss is transferred to the consolidated income statement. If the investment available for sale is within 12 months from the ending date of the financial statements, it is reported under current assets otherwise under non-current assets. h- Inventories Inventories representing fuel and lubricants on board of the vessels are shown as inventories at the balance sheet date, and its cost is determined using First in First out (FIFO) method which is considered more appropriate to the Company’s operations. The differences between the weighted average method and FIFO method are not significant to the consolidated income statement. Spare parts and other consumables on board for each vessel are charged to operating expenses on purchase. i- Deferred dry-docking costs Deferred dry-docking costs are amortized over a period of two to five years from the date of completion of dry-docking depending on the type of vessel. Where a vessel undergoes another dry-docking operation during the specified amortization period, any unamortized balance of deferred costs related to the previous dry-docking of the vessel is amortized in the consolidated income statement in the period that ends at the beginning of the new dry-docking operation.
The National Shipping Company of Saudi Arabia Annual Report 2010
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