Bahri Annual Report-2014

2 - Significant accounting policies A- Accounting convention

The accompanying consolidated financial statements are prepared in accordance with the accounting standards issued by the Saudi Organization for Certified Public Accountants (SOCPA) and under the historical cost convention, except for the investments held for trading and investments available for sale. Measurement of fair value of the group follows the accruals basis of accounting in recognizing revenues and expenses.

B- Period of financial statements According to by-laws, the fiscal year of the Company starts on the 1st of January and ends on December 31st of each Gregorian year.

C- Basis of consolidation

 These consolidated financial statements include assets, liabilities and the results of operations of the company and its subsidiaries listed in Note (1) above.  The subsidiary company is that in which the Company has, direct or indirect long term investment, comprising an interest of more than 50% in the voting capital and over which it exercises practical control. The subsidiary company is consolidated from the date the company obtains control until such control ceases.  All significant inter-group accounts and transactions as well as realized and unrealized gains (losses) on these transactions are eliminated on consolidation.  Non-controlling interest represents portion of profit or loss and net assets not owned by the Company, and is shown as a separate component in the consolidated balance sheet and consolidated statement of 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 the consolidated 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 events and actions, actual results ultimately may differ from those estimates. E- Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise bank balances and cash, murabaha and short-term deposits, and investments convertible into known amounts of cash, and maturing within three months or less from the date of acquisition, which is available to the Group without any restrictions. F- Trade accounts receivable Trade accounts receivable are stated at net realizable value, net of provision for doubtful debts, A provision against doubtful debts is established when there is objective evidence that the Company 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

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Annual Report 2014

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