BIRLESIM_2022 ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2022 FAALİYET RAPORU 142 Birleşim Mühendislik Isıtma Soğutma Havalandırma Sanayi Ticaret Anonim Şirketi and Its Subsidiaries (Currency in Turkish Lira (“TL”) unless otherwise stated). Notes to the Consolidated Financial Statements for the Year Ended 31 December 2022 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.8 Summary of Significant Accounting Policies (Continued) Trade receivables Trade receivables are carried at amortized cost using the effective interest rate method and, if any provision for doubtful receivables, after it is deducted. Notes and postdated checks classified as trade receivables are carried at their discounted values by discounting them with the effective interest rate method. Within the scope of TFRS 9, provision for doubtful receivables is recorded as expense. If there is a concrete indication that overdue receivables cannot be collected, provision for doubtful receivables is made considering the collaterals received from the customer. The Company uses the simplified approach in TFRS 9 to calculate the expected credit losses of these financial assets. This method requires the recognition of lifelong expected credit losses for all trade receivables. Trade payables Trade and other payables are recorded with the amortized cost which represents the current market value of invoiced or not invoiced amount of future purchases of goods and services. Maturity difference finance income/expenses Maturity difference finance income/(expenses) means the income/(expenses) attributable to forward purchases and sales. Such income/(expense) is recognized as finance income and expense from forward purchases and sales during the period and is included in other operating expenses and income during the term. Inventories Inventories are valued at the lower of cost or net realizable value. Cost of inventories is calculated on first in first out (“FIFO”) basis. Cost of inventories is composed of the purchase costs of goods. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. Financing costs incurred for inventories purchased on deferred settlement terms are excluded from the cost of inventories. Property, plant, equipment, and related depreciation Property, plant and equipment are carried at cost less accumulated depreciation and permanent impairment. Depreciation is provided on a straight-line basis based on the approximate economic useful lives taken into consideration. The useful lives of property, plant and equipment are as follows Useful Life Buildings 50 years Machinery and equipment 4 - 20 years Vehicles 5 years Furniture and Fixtures 3 - 15 years Other tangible Assets 3 years Leasehold Improvements 3 - 15 years Land and parcels are not depreciated as it is deemed to have an indefinite life.