BIRLESIM_MUEHNDSILIK 2023 AR

BİRLEŞİM MÜHENDİSLİK 2023 ANNUAL REPORT 146 Birleşim Mühendislik Isitma Soğutma Havalandirma Sanayi Ticaret A.Ş. and its Subsidiaries (Amounts are expressed in terms of purchasing power of Turkish Lira (“TL”) as of December 31, 2023 unless otherwise stated.) Notes to the Consolidated Financial Statements For the Year Ended 31 December 2023 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) (a) Basic Principles of Presentation (Continued) In addition, the calculation of fair value is divided into three levels: Level 1, Level 2 and Level 3, as explained below, depending on whether the fair valuation information is at an observable level and the importance of this information in itself: - The first level of information is the quoted prices (unadjusted) obtained by an entity at the measurement date and used for similar assets and liabilities in an active market. - Information at the second level is information that can be observed directly or indirectly for an asset or liability, other than the stock market price specified at the first level, and - Third level information is information that is not based on observable data in the market and is used to determine the fair value of an asset or liability. (b) Inflation Accounting Capital Market Board made an announcement on 17 March 2005 to the effect that inflation accounting should be discontinued for companies that operate in Turkey and prepare their financial statements in accordance with Accounting and Reporting Standards issued by the Capital Market Board in effect from 01. January 2005. Based on this resolution the financial statements of the Group as from 01 January 2005 were not restated for the effects of inflation accounting as required by TAS 29” Financial Reporting in Hyperinflationary Economies”. Public Oversight Accounting and Auditing Standards Authority (“KGK”) made a statement regarding the implementation of inflation accounting in Turkey on 23 November 2023, and according to the said announcement, the financial statements of enterprises applying TFRS for the annual reporting period ending on or after 31 December 2023 are in accordance with TMS 29. It must be presented after being adjusted for the effect of inflation in accordance with the relevant accounting principles in. As of the date these financial statements were prepared, inflation adjustment was made in accordance with TAS 29 while preparing the financial statements dated 31 December 2023. TAS 29 stipulates that financial statements prepared in the currency of hyperinflationary economies should be shown in the measurement unit at the balance sheet date and that balances from previous periods should be shown in the same unit by using the general price index. One of the situations that requires the application of TMS 29 is that the three-year cumulative inflation rate is approximately 100% or above. Based on the consumer price index (“CPI”) published by the Turkish Statistical Institute (“TUIK”) in Turkey, the cumulative rate in question was 268% for the three-year period ending on December 31, 2023. Although there is no increase in the price indices at the level mentioned above, the public keeps their savings mainly in foreign currency, determines the prices of goods and services in foreign currency, links interest rates, wages and prices to general price indices, to cover losses in purchasing power, including short-term transactions. If there are signs of high inflation, such as prices being determined by adding maturity difference, TMS 29 must be applied. Adjustments made for inflation were calculated based on the coefficients found using the Consumer Price Index in Turkey published by TURKSTAT. The indexes and coefficients used in the correction of the attached financial statements as of December 31, 2023 are stated below: Period Index Correction Coefficient 31 December 2023 1.859,39 1 31 December 2022 1.128,45 1,64773 31 December 2021 686,95 2,70673