The National Shipping Company of Saudi Arabia (A Saudi Joint Stock Company) Notes To The Consolidated Financial Statements December 31, 2013 (In Thousands Saudi Riyals) j) Investments 1) Investments in associated companies: Investments in associated • Investments held for trading Certain investments in securities are classified as held for trading based on the management’s of units are recognized in the consolidated statement of Chapter 5 Consolidated Financial Statements and Auditor’s Report for the year ended 31 December 2013
income in the period in which these units are redeemed, 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 12 months from the consolidated balance sheet date, it is reported under current assets, otherwise under non-current assets. • If the fair value of these
intention. These investments are stated at fair value. Unrealized gains or losses are recognized 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 intentions. 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 held to maturity are not met, The available for sale investments are stated at fair value and unrealized gains or losses are recognized under shareholders’
companies in which the Group has significant influence, but no control, over the investee’s financial and operational policies, generally hold an equity interest ranging between 20% and 50%, are accounted for using the equity method whereby the original cost of the investment is adjusted by the post-acquisition retained earnings and reserves of those companies, based on their latest financial statements. 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 shown net of impairment, if any. 2) Investments in securities: Investments in securities are classified into three categories as follows:
investments is not available, cost is considered the most appropriate method for such securities.
k) Fixed assets Fixed assets are recorded at actual cost and are depreciated using the straight- line method to allocate the costs of the related assets over the estimated useful lives using the following depreciation rates:
equity, The realized gains or losses from the redemption
Buildings and improvements
5 to 33.3%
20 to 25%
Fleet and equipment *
4 to 15%
15 to 25%
Containers and trailers
8.33 to 20%
Container yard facilities
10 to 25%
Furniture and fixtures
7 to 15%
Tools and office equipment
2.5 to 25%
* RoRo (RoCon) ships and VLCCs are depreciated over a period of twenty five years. Used vessels are depreciated based on their estimated remaining useful lives. Residual value is calculated at 10% of the vessels’ cost. The equipment of RoRo (RoCon) are depreciated over a period of fifteen years. Ships under construction are stated at actual cost plus all other attributable costs until to be ready for use. Upon completion, ships under construction are transferred to fixed assets and are depreciated over their estimated useful lives. Gains or losses from disposal of fixed assets are determined by comparing proceeds with the carrying value and are recorded in the consolidated statement of income. Maintenance and normal repairs which do not materially extend the estimated useful life of an asset are charged to the consolidated statement of income as and when incurred. Major renewals and improvements, if any, are capitalized and the assets so replaced are retired.
l) Impairment of non-current assets The Group periodically reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Where impairment subsequently reverses, the carrying amount of the asset or the cash generating unit is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognized for the asset or cash generating unit in prior years. A reversal of impairment is recognized immediately as revenue in the consolidated statement of income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. If the recoverable amount of the asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. Impairment loss is recognized immediately as expenses in the consolidated statement of income.
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