Page 79 - ICD-AR22-English

Notes to the Separate Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
Pursuant to the above decision, the Corporation is required to comply with requirements of FAS 23 -“Consolidation’’, under which the Corporation is required to prepare consolidated and separate financial statements from January 1, 2022 (the effective date of the decision). Since the Corporation ceases to be to be an investment entity, the change in status is accounted for as a 'deemed acquisition' of the Corporation’s subsidiaries and associates, as follows:
• the entity applies business combination requirements to any subsidiary (and associates) that was previously measured at fair value through profit or loss;
• the date of the change of status (i.e. the date the entity ceases to be an investment entity) is the deemed acquisition date for such subsidiaries and associates;
• the fair value of a subsidiary or associate at the date of change in status is the deemed consideration for the purpose of measuring any goodwill or gain from a bargain purchase; and
• all subsidiaries of the entity are consolidated in accordance with the general requirements of FAS 23 from the date of change of status in the consolidated financial statements of the Corporation. Likewise, all associates of the entity are equity accounted in accordance with the general requirements of FAS 24 from the date of change of status in the consolidated financial statements of the Corporation.
These separate financial statements contain information about the Corporation and its investments on an individual basis and do not contain consolidated information related to the Corporation and its subsidiaries
as one entity (note 13.1). The subsidiaries and the investment in associates have been reflected at fair value through equity in line with the previous policy of the Corporation before the transition to investment entity during 1434H and in accordance with the requirements of FAS 23 which allows investment in associates and subsidiaries to be recognized at fair value in the separate financial statements. The Corporation also prepares consolidated financial statements which include the results of all entities as ICD Group. The comparative figures for the year ended December 31, 2021 are based on the Corporation’s status as an investment entity and may not be comparable since the following changes were made as a result of Corporation revoking the investment entity status:
a) Whilst the investment in associate and subsidiaries continue to be measured at fair values, the changes in fair values are now being reflected in the statement of changes in members’ equity for the year ended December 31, 2022 compared to those being recognized in the statement of income for the year ended December 31, 2021.
b)The management reassessed the business model relating to investment in sukuk and made the following reclassifications during the year ended December 31, 2022:
- A portion of the Sukuk investments is now being carried at amortized cost since these are being held in a business model to solely collect principal and profit.
- A portion of the Sukuk investments have now been designated at fair value through statement of changes in members’ equity since these are being held in a business model to both collecting expected cash flows and selling the investment.
REINVIGORATING THE PRIVATE SECTOR TO SHAPE A BETTER FUTURE 77