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Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill al-
located to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed in the subsequent period. For other assets, an impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been deter-
mined (net of depreciation or amortisation) if no impairment loss had been recognised in previous periods.
P Provisions
Provisions are determined by discounting the expected future cash flows at a pre
‑
tax rate that reflects current market assess-
mentsof the timevalueofmoneyand the risks specific to the liability. Theunwindingof thediscount is recognisedasfinance cost.
1 Warranties
A provision for warranties is recognised when the underlying products or services are sold, based on historical warranty data
and a weighting of possible outcomes against their associated probabilities.
2 Legal Claims
The recognition of the provision for legal claimswhen there are legal claims against the Group and after receiving appropriate
legal advice.
3 Other Provisions
Provisions are recognized when there are other expected claims from third parties with respect to the activities of the Group
and, according to the latest developments and discussions and agreements with those parties.
Q Leases
1 Financial lease
For leases within the scope of Law 95 of 1995, lease costs including maintenance expense of leased assets are recognized in
income statement in the period incurred. If the Company elects to exercise the purchase option on the leased asset, the option
cost is capitalised as property, plant, and equipment and depreciated over their expected remaining useful lives on a basis
consistent with similar assets.
Other finance leases that do not fall under the scope of Law 95 for 1995, or fall within the scope of Law 95 of 1995 but do not fall
under the scope of EAS No.20 (Accounting Principles and Standards Attributable to Finance Lease). also in case the company
will sale property, plant and equipment and leasing it back the asset is capitalized at the inception of the lease at the lower of
the fair value of the leased asset or the present value of theminimum lease payments. Each lease payment is allocated between
the liability andfinance charges so as to achieve a constant rate of interest charge on the outstanding finance cost balance. The
finance lease obligations, net of finance charges, are classified as liabilities. The interest element of the finance cost is charged
to the income statement over the lease period so as to produce a constant rate of interest over the remaining balance of the
liability for each period. Assets acquired under this type of finance lease are depreciated over the shorter of the useful life of
the assets or the lease term.
Gains arising from the excess of the collected payments over the book value of the non-current assets that are being sold and
leased back through finance leases are deferred and amortized over the lease term.
2 Operational lease
Lease payments under an operating lease, excluding any incentives received from the lessor over the contract period, shall be
recognized as an expense charged to the statement of income for the year on a time pattern basis and accrued base.
2016 ANNUAL REPORT
105
GB Auto (S.A.E.)
Notes to the consolidated financial statements for the financial year ended December 31, 2016
(In thenotes all amounts are shown inThousandEgyptianPounds unless otherwise stated)