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.
G- 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. H- Inventories Inventories consisting 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. 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 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.
J- Investments 1- Investments in associated companies
Investments in associated companies in which the Group has significant influence but not control over their financial and operational policies, and where the group generally holds an equity interest ranging between 20% and 50%, are accounted for using the equity method, where by the original cost of investment is adjusted by the post acquisition relating earnings (accumulated losses) and reserves of these companies based on their latest financial statement. When the Group acquires an interest in an associated companies 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.
2- Investments in securities Investments in securities are classified into three categories as follows:
Investments held for trading Certain investments 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 maturity Certain investments in securities are classified as held to maturity based on the management’s intention. These investments are stated at cost, adjusted by premium or discount, if any. Investments available for sale Certain investments are classified as available for sale if the conditions of classification as held for trading or investments
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The National Shipping Company of Saudi Arabia ( )
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