Bahri Annual Report-2016

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Consolidated Financial Statement

Bahri Annual Report

Consolidated Financial Statement

Bahri Annual Report

Significant Accounting Policies (Continued)

g. Trade accounts receivable Trade accounts receivable are stated at net realizable value, net after deducting provision for doubtful debts, a provision against doubtful debts is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Such provisions are charged to the consolidated statement of income within “General and administrative expenses”. When an account receivable is uncollectible, it is written-off against the provision for doubtful debts. Any subsequent recoveries of amounts previously written- off are credited against “General and administrative expenses” in the consolidated statement of income. h. Accounting for finance leases The present value of lease payments for assets sold under finance leases together with the unguaranteed residual value at the end of the lease is recognized as a receivable net of unearned finance income. Lease income is recognized over the term of the lease using the net investment method, which reflects a constant periodic rate of return. i. Inventories Inventories consists of fuel and lubricants on board of the vessels are shown as inventories at the consolidated statement of financial position date, and the cost is determined using the First in First Out (FIFO) method which is considered more appropriate to the Group’s operations. The differences between the weighted average method and

FIFO method are not significant to the consolidated statement of income. Spare parts and other consumables on board for each vessel are charged to operating expenses upon purchase. j. Deferred dry-docking costs The Group amortizes the deferred dry-docking costs 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 dry-docking costs of the related vessels are fully charge to the consolidated statement of income of the period in which new dry-docking operation is started. k. Investments 1. Investments in associated companies: Investments in associated companies in which the Group has significant influence, but not control, over the investee’s financial and operational policies, generally holds an equity interest ranging between 20% and 50%, are accounted for using the equity method, whereby the original cost of investment is adjustedby thepost acquisition retained earnings (accumulated losses) and reserves of these companies based on their latest financial statements. When the Group acquires an interest in an associated company for an amount in excess of the fair value of the acquiree’s net assets, the difference is treated as goodwill and recorded as part of the investment account.

Goodwill is impaired by the decline in value amount, if any.

recognized the consolidated statement of income in the period in which these investments are sold. If there is a permanent decline in the value of these investments or objective evidence for impairment, the unrealized loss is transferred to the consolidated statement of income. If there is an intention to sell the available for sale investment within twelve months from the consolidated balance sheet date, it is reported under current assets, otherwise under non- current assets. l. Intangible assets Intangible assets represents the long term substantial evaluation of transportation contracts, which resulted from purchasing the operations and assets of Vela Company, was recorded as intangible assets in the consolidated statement of balance sheet. The value of those intangible assets are amortized over the average useful life of purchased assets and estimated in accordance with the company’s accounting policy of recording fixed assets and its depreciations. Amortization is charged to the consolidated statement of income. m. Fixed assets Fixed assets are recorded at cost and are depreciated using the straight-line method over the estimated useful lives using the following depreciation rates: in

2. Investments in securities: Investments in securities are classified into three categories as follows: • Investments held for after trading Certaininvestments in securities are classified as held for trading based on the management’s intention. These investments are stated at fair value. Unrealized gains or losses are recorded in the consolidated statement of income. • Investments held to after maturityCertaininvestments in securities are classified as held to maturity based on the management’s intentions These investments are stated at cost, adjusted by premium or discount, if any. • Investments available for after sale Certain investments are classified as available for sale if the conditions of classification as held for trading or investments held to maturity are not met. The available for sale investments are stated at fairvalueandunrealizedgains or losses are recognized under shareholders’ equity.

The realized gains or losses from sale of investments are