Annual Report - Orascom Development

48 | consolidated financial statements | OHD Annual Report 2006
4.5 Impairment of Assets
On the financial statement date, the book value of assets owned by the company is reviewed, and in the case that there are indications that
the recoverable value, of these assets is lower than its book value, then the value of assets will be reduced to its recoverable value, and
charged to the income statement. The annual depreciation concerning the following years’ fixed assets is calculated on a fair value basis.
4.6 Other Assets
Other assets are amortized by using the straight line method over a period from 7 to 10 years.
4.7 Long Term Investments
4.7.1 Long Term Investments
Investments in long term investments in which the Group exercises significant influence are recorded at the acquiring cost of the
associates and subsidiaries in accordance with the equity method. Participation in profit or loss is then recorded. Whenever the
book value of an asset exceeds its recoverable amount, an impairment loss is recognized by charge to the statement of profit and
loss. When the book value of an asset exceeds its recoverable amount on other than temporary basis, impairment loss is recognized
by charge to the statement of profit and loss.
Long term investments in which the company does not have significant influence, investments are recorded at cost and investments
revenues are recorded when the right to receive the dividends payment is established from the net profits of the investee arising
subsequent to the date of acquisition by the investor.
4.7.2 Investments Available for Sale
The available for sale investments are stated at fair value at the financial statements date, the change in fair value, whether profit or
loss, is stated directly in the shareholders’ equity except for the investment impairment which is charged to the income statement.
At disposal date, the consolidated profits and losses, which were previously charged to the shareholders’ equity, are stated in the
income statement. The fair value of the available for sale investments is determined according to the Stock Market rate as of the
financial statements date. As for the investments not registered at Stock Market and in which can not be reliably measured at fair
value, investments are stated at cost.
4.8 Goodwill
The positive goodwill resulting from asset acquisition is recorded as long term assets. A study is being prepared to find out if there is any indication
of impairment in its value. In case there is, this impairment will be included in the income statement.Negative goodwill is charged directly
to the income statement according to the International Accounting Standards No. (3) Business Combination.
4.9 Inventory
Inventories of supplies and raw materials are stated at the lower of cost or market. Inventory is valued by using the weighted average method.
4.10 Assets held for Sale
Assets are stated at market value as of the purchase date. A provision is formed to meet the impairment of the market value (if any)
4.11 Work in Progress cost
Work in progress are stated on the basis of actual cost and are stated in the income statement when the contract of sale of this units is signed.
4.12 Deferred Taxes
Deferred tax is recognized due to the temporary differences between carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in computation of taxable profits, using the tax rates that are expected to apply to the period when
the asset is realized or the liability is settled, based on tax rates (tax laws) enacted as of the balance sheet date. A deferred tax asset shall
be recognized for all deductible temporary differences to the extent that is probable that taxable profit will be available against which the
deductible temporary difference can be utilized.