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GB Auto and its subsidiaries (S.A.E.)
Notes to the consolidated financial statements For the financial Year ended December 31, 2014
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)
V. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Group’s activities. Revenue is shown net of sales tax, returns, rebates and discounts and after eliminating sales within
the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to the Group andwhen specific criteria have beenmet for each of the Group’s activities as described below. The amount of revenue
is not considered to be reliablymeasurable until all contingencies relating to the sale have been resolved. The Group bases its estimates
on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
a. Sales – wholesale and showrooms
Sales of goods are recognised when a Group entity has delivered products to the wholesaler, the wholesaler has full discre-
tion over the price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of
the products. Delivery does not occur until the products have been delivered either in the Group entity warehouse or in the
wholesalers locations depending on the agreements. Accordingly, the risks and benefits have been transferred to the whole-
saler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions
have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.
No element of financing is deemed present as the sales are made on a short credit term basis.
b. Sales – retail and Companies
The Group operates a chain of showrooms for selling. The retail sales are usually made in instalments.
Instalment sales revenues are those that require the payment of the value in instalments that are charged at sale price ex-
cluding interest as revenues on the sales date. The selling price is the present value of the instalments and is determined by
discounting the value of the instalments due using the interest rate applicable. The deferred interest income is charged as a
revenue when due and on the basis of the matching principle, taking into account the applied interest rate on the transac-
tion.
c. Sales of services – maintenance
The Group’s entities sells a maintenance service. That service is provided on a time and material basis. Revenue from time
and spare parts is recognised on delivering the services.
d. Financial Lease
Lease income is recognized on the basis of the rate of return on the lease contract plus an amount equal to the depreciation
charge for the year and the difference between the recognized lease revenue and the gross receivable is deferred in the bal-
ance sheet in the same financial year in a separate account either debit or credit and is offset against the net book value of
the leased asset on termination of the lease contract.
e. Interest income
Interest income is recognized on a time proportion basis, taking account of the principal outstanding and the effective inter-
est rate over the period to maturity, when it is determined that such income will accrue to the Group.
f.
Dividend income
Dividend income is recognised when the right to receive payment is established.
W. Current and deferred income tax
The current income tax charge is calculated on the basis of the tax laws enacted at the balance sheet date in the countries where the
Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liabilitymethod, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a transaction other than a business.
Ghabbour Auto | 2014 ANNUAL REPORT
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