ZaraAnnual-English2013

Revenue recognition
Revenues are recognized upon rendering services and
issuance of invoice.
Dividends are recognized when the shareholders’ right to
receive payment is established.
Rental income is recognised on a straight line basis over the
lease term as other income.
Other revenues are recognized on an accrual basis.
Operating Lease
Group as a lessor
Operating lease revenue from investment properties are
recognised as other income in the consolidated income
statement on a straight-line basis over the lease term.
Foreign currency
Foreign currency transactions during the year are recorded
using exchange rates that were in effect at the dates of the
transactions. Assets and liabilities denominated in foreign
currencies are translated to Jordanian Dinars using the
prevailing exchange rates at year end. Foreign exchange
gains or losses are reflected in the consolidated income
statement.
Contingencies
Contingent liabilities are not recognized in the consolidated
financial statements but are disclosed when the possibility
of an outflow of resources embodying economic benefits is
remote.
3. Significant Accounting Judgment, Estimates and
Assumptions
The preparation of the consolidated financial statements requires management to make estimates and assumptions that
affect the reported amounts of financial assets and liabilities and disclosure of contingent liabilities. These estimates and
assumptions also affect the revenues and expenses and the provisions. In particular, considerable judgment by management
is required in the estimation of the amount and timing of future cash flows when determining the level of provisions required.
Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and
uncertainty and actual results may differ resulting in future changes in such provisions.
Judgments, estimates and assumptions in the consolidated financial statements are detailed below:
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A provision is established for accounts receivable based on basis and assumptions approved by the Group’s
management to estimate the required provision.
Income tax expense is calculated and charged for the year in accordance with laws and regulation and IASs. Deferred
tax assets and liabilities and income tax provision is calculated accordingly.
The management periodically reviews the useful lives of property and equipment in order to calculate the annual
deprecation expense on the general conditions of the property and equipment and estimate the future useful lives
accordingly.
A provision will be established against court cases where the Group is the defendant based on a legal study provided
by the Group’s legal advisor which will determine the risk that may occur. These studies are reviewed periodically
and the provision is adjusted accordingly.
A contingent asset is not recognized in the consolidated
financial statements but are disclosed when an inflow of
economic benefit is possible.
64 Consolidated Financial Statements Annual Report 2013 65