BIRLESIM_2022 ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2022 FAALİYET RAPORU 144 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) Financial Assets Classification and Measurement The Group classifies its financial assets in three categories as financial assets at fair value through profit or loss, whose fair value changes are accounted for at amortized cost. The classification is based on the business model used by the entity for the management of financial assets and the characteristics of the contractual cash flows of the financial asset. The Company makes the classification of its financial assets on the date of purchase Financial assets measured at amortized cost are financial assets that are held under a business model that aims to collect contractual cash flows and that are not traded in an active market where cash flows that include interest payments on principal dates and principal balances at certain dates in the contractual terms. Financial assets that are recognized at amortized cost include cash and cash equivalents and trade receivables. The related assets, with their fair values in the initial recognition of financial statements; in subsequent accounting, it is measured at amortized cost using the effective interest rate method. Discounted trade receivables for which provisions for doubtful receivables are accrued within the scope of TFRS 9 are assumed to approximate the fair values of these assets. Gains and losses resulting from the valuation of non-derivative financial assets measured at amortized cost are recognized in the income statement. Financial assets at fair value through profit or loss are comprised of financial assets measured at amortized cost except for financial assets at fair value through profit or loss. Gains and losses arising from the valuation of such assets are recognized in the income statement. Financial assets at fair value through profit or loss are financial assets held for the purpose of collecting the contractual cash flows and selling the financial asset. Gains or losses arising from the related financial assets are recognized in other comprehensive income, except for impairment losses or gains and losses. In case of sale of such assets, the valuation differences classified in other comprehensive income are classified as prior years’ profits. Financial Borrowings Financial borrowings are recognized initially at the proceeds received, net of transaction costs incurred. The financial borrowings are followed in the consolidated financial statements with their discounted values calculated with effective interest rate. Any difference between the proceeds and redemption value is recognized on an accrual basis over the period of the financial borrowings in the consolidated statement of profit or loss. Investment properties Buildings and land held to earn rentals or for the capital appreciation or both, rather than for use in the production or supply of goods or services, or for administrative purposes or sale in the ordinary course of business, are classified as investment property. Investment property is recognized as an asset when it is probable that the future economic benefits that are associated with the property will flow to the entity and the cost of the property can be reliably measured. Investment property is initially measured at cost, including transaction costs. After initial measurement, investment property is measured under a fair value model or a cost model. Investment properties are carried at cost less accumulated depreciation. Investment properties are depreciated on a straight-line basis (Note 10). The depreciation periods for investment property, which approximate the economic useful lives of such assets, is 50 years. The Group elected to measure investment properties under cost method as the carrying values are expected to approximate the fair values. Investment properties are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of asset net selling price or value in use.