BIRLESIM_2021_ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2021 ANNUAL REPORT 146 Birleşim Mühendislik Isıtma Soğutma Havalandırma Sanayi Ticaret A.Ş. and Its Subsidiary (All amounts expressed in Turkish Lira (“TL”)) Notes to the Consolidated Financial Statements For the Year Ended 31 December 2021 2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS (a) Basis of Presentation The consolidated financial statements are based on historical cost. In general, the fair value of the consideration paid for assets is taken as basis in determining historical cost. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (ie an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for leasing transactions that are within the scope of TFRS 16 “Leases”, and measurements that have some similarities to fair value but are not fair value. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. - Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. - Level 3 inputs are unobservable inputs for the asset or liability. (b) Restatement of Financial Statements in Hyperinflationary Periods Turkish Accounting Standard 29 (TAS 29) requires that financial statements prepared in the currency of a hyperinflationary economy are stated in terms of the measuring unit current at the reporting date and the corresponding figures for the previous periods are restated in the same terms. As the hyper-inflation period in Turkey has ended as of 1 January 2006, the application of inflation adjustment of the financial statements is terminated in 2006. For that reason, the financial statements for all periods prior to 31 December 2005 are restated at the purchasing value of the Turkish Lira at 31 December 2005. Restatement is calculated using the conversion factors derived from the countrywide wholesale price index published by the Turkish Statistical Institution. Additions to non-monetary items subsequent to 1 January 2006 are stated at their nominal values.