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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)
H. Investments available for sale
The investments available for sale are initially recognized at their fair value at the acquisition date. Subsequently, available
for sale investments are measured at fair value (market value) and the changes in fair value are recognized as available for
sale reserve in the equity. The reserve related for an available for sale investment is realized in income statement when such
investment is disposed.
Unquoted investments in equity instruments (have no market value in active market) are recognized at its acquisition
cost, if its fair value could not be accurately determined through acceptable evaluation method. The carrying amount is
decreased by any impairment which is charged to the statement of income per each investment.
I. Lease
Financial lease
For leases within the scope of Law 95 of 1995, lease costs including maintenance expense of leased assets are recog-
nized in income statement in the year 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 the minimum lease payments. Each lease
payment is allocated between the liability and finance 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 and charged directly to the
income statement.
Operating 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.
J. Investment property
Investment property is measured at fair value. The fair value is the value of which the property could be traded between
knowledgeable and willing parties in an arm’s length transaction. Any gain or loss arising from a change in the fair value
of investment property is recognized in the income statement in the same year of change. The fair value of the investment
property is reviewed at each balance sheet date based on the market value which is determined by independent expert.
K. Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined by the weighted average method. The
cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related produc-
tion overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
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