BIRLESIM_2021_ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2021 ANNUAL REPORT 172 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) (l) Significant accounting judgements, estimates and assumptions (continued) Income tax The Group is subject to different tax legislation and laws in numerous jurisdictions due to its operations in foreign countries. Significant judgement is required in determining the provision for income taxes as there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. For such countries, finalization of tax balances takes generally 1-5 years. Thus, there is need for considerable estimations while calculating the provision for taxes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the results for the year and the respective income tax and deferred tax provisions in the year in which such determination are made. Provision for doubtful receivables Doubtful receivables reflect the amounts that the management believes will cover future losses of receivables that exist as of the balance sheet date, but that are at risk of not being collected within the framework of current economic conditions. While evaluating whether the receivables are impaired or not, the past performances of the borrowers, their credibility in the market and their performance from the balance sheet date to the approval date of the consolidated financial statements are also taken into consideration. Provision for litigation While allocating provisions for group lawsuits, the probability of loss of the lawsuits and the liabilities that will arise in case of loss are evaluated by the Group management, taking the opinion of legal counsel. Group management determines the litigation provision amount based on the best estimates. (m) Segment Reporting of Consoliated Financial Statement The Group operates in the fields of mechanical works, electrical installation works and construction equipment rental and reports according to departments.