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MOFARREH MARZOQ AL-HARBI CONTRACTING ESTABLISHMENT
(A SOLE PROPRIETORSHIP)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE TERM FROM 1 JANUARY 2013TO 31st AUGUST 2013
CURRENCY USED : SAUDI RIYAL
1. NATURE AND PURPOSE OF THE CORPORATION
Name : Mofarreh Marzoq Al-Harbi Contracting Establishment.
Legal Status : As at 27 Shawl 1434H (corresponding to 02 September 2013G)the Establishment has been transformed to A Limited Liability Company with all its assets and its liabilities with the same Main CR Number and branches, the new Partners are:
- Marzoq bin Mofarreh Al- Harbi
- Abdullah bin Mofarreh Al- Harbi
- Badr bin Mofarreh Al- Harbi
Commercial Registration : No.205004953 dated 2/7/1397 H.
Activity : General contracting of building, goods transportation and Equipments rent.
Term : The Financial statement converging the financial period from 1 January 2013 to 31st August 2013 which legal status was turned from establishment to company.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with the Saudi Accounting Standards and relevant Saudi Laws & Regulations. They are prepared using the historical cost basis and convention using the accrual basis of accounting.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Foreign Currency Transaction
The Establishment maintains its accounts in Saudi Riyals. Transactions denominated in foreign currencies are translated to Saudi Riyals at the prevailing exchange rates at the date of transactions. At the balance sheet date, balances of monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates declared, at that date, Exchange differences resulting from translation are taken to the income statement.
3.2 Fixed Assets & Depreciation
Fixed assets are stated at historical cost less accumulated depreciation and impairment losses. Depreciable assets are depreciated using the straight-line method over the estimated useful life of each type of asset. The annual depreciation rates which depending on the estimated useful lives of the assets for depreciation calculation purposes are as follows:-
Life span year Life span year
Buildings 10 Tools 4
Equipment &Machinery 4 Furniture's 10
Motor Vehicles 4
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3.3 Inventories
Inventories are valued at cost or net realizable value, whichever is lower. Cost is determined using weighted Average method.
3-4 Revenue Recognition
Income is recognized construction contracts in accordance with the method of percentage of completion, where the calculated percentage of completion on the basis of the proportion of actual costs for the work to date financial statements to the estimated total cost for each contract, and when the contract is in its first stage and cannot estimate the results accurately revenue is recognized to the extent the costs incurred To be recoverable, include the costs of all contracts the cost of materials and labor direct, indirect and indirect costs related to those contracts
3-5 End of Service Indemnities Provision
Provision is made for amounts payable under the Saudi Arabian Labour law applicable to employees’ accumulated periods of service at the balance sheet date.
3-6 Cash & Cash Equivalents
For the purpose of preparing the statement of cash flows, the Corporation considers all cash at banks including time deposits with a maturity of less than three months as cash and cash equivalents and are presented net of overdraft.
3-7 Payable and Sundry Accrued Expenses
Liabilities are recognized for amounts payable in the future for goods or services received, whether billed or not billed.
3-8 Receivable and Sundry Debtors & Other Debit Balances
Receivable and sundry debtors & other debit balances are stated at nominal values less write downs for any amounts expected to be irrecoverable.
3-9 Impairment
The carrying amounts of the Establishment's assets, other than inventories, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the income statement.
3-10 Zakat
The Zakat provision shall be charger to the Owner’s account.
3-11 Expenses
General and administration expenses represented in the expenses of the administration and financial departments.