BIRLESIM_2021_ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2021 ANNUAL REPORT 165 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 (Continued) (k) Summary of Significant Accounting Policies (continued) Financial Instruments (continued) Derecognition The Group derecognized a financial asset when the contractual rights to the cash flows from the asset expired, or it transferred the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset were transferred. Any interest in such transferred financial assets that was created or retained by the Group was recognized as a separate asset or liability. Impairment The Company start to apply the expected credit loss model for trade receivables accounted at amortized cost in the consolidated financial statements. Accordingly, Company has preferred to apply “simplified approach” for the recognition of impairment losses on trade receivables, carried at amortised cost and that do not comprise of any significant finance component (those with maturity less than 1 year). In accordance with the simplified approach, Company measures the loss allowances regarding its trade receivables at an amount equal to “lifetime expected credit losses” except incurred credit losses in which trade receivables are already impaired for a specific reason. If the amount of the impairment subsequently decreases due to an event occurring after the writedown, the reversal of the provision is credited to other operating income. In the calculation of the expected credit losses, the Company’s future forecasts are taken into consideration along with the past credit loss experiences. Cash and Cash Equivalents: Cash and cash equivalents comprise cash on hand, demand and time deposits, other short-term highly liquid investments which have maturities of three months or less from date of acquisition. Cash on hand consists of Turkish Lira balances. Turkish Lira balances are stated at their carrying values. Turkish Lira deposit accounts are stated at face values and foreign currency accounts are translated into Turkish Lira at the foreign exchange rates issued by the Central Bank at the reporting date. Trade Receivables: Trade receivables are financial assets created by the Group through selling goods directly to the customers. The balance of trade receivables consisting of notes receivable, post-dated cheques and receivables from customers are subject to rediscount. The discounted trade receivables for which provisions for doubtful receivables are accrued are assumed to approximate to the fair values of these assets. In addition, the group uses credit loss model for trade receivables that accounted with amortised cost in financial statements. Accordingly, Group has preferred to apply “simplified approach” for the recognition of impairment losses on trade receivables, carried at amortised cost and that do not comprise of any significant finance component (those with maturity less than 1 year). In accordance with the simplified approach, Group measures the loss allowances regarding its trade receivables at an amount equal to “lifetime expected credit losses” except incurred credit losses in which trade receivables are already impaired for a specific reason. If the amount of the impairment subsequently decreases due to an event occurring after the writedown, the reversal of the provision is credited to other operating income. In the calculation of the expected credit losses, the Group’s future forecasts are taken into consideration along with the past credit loss experiences. Discounted trade receivables for which provisions for doubtful receivables and expected credit loss provision are accrued are assumed to approximate the fair values of these assets.