BIRLESIM_2022 ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2022 FAALİYET RAPORU 149 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) Revenue recognition (Continued) Excess goods on inventories Excess goods on inventories received on free basis from pharmaceutical companies to be consequently distributed on free basis to pharmacies as promotion are recognized in inventories at zero value and have the effect of reducing the unit costs of drugs. Excess Goods Pre-delivered: Excess goods delivered to pharmacies on free basis during campaign periods, on the account and demand of the pharmaceutical companies are consequently received from pharmaceutical companies on free basis, or alternatively, are invoiced to pharmaceutical companies as the cost of pre-delivered excess goods. Excess goods promotions received on free basis for pre-delivered goods are recognized in inventories on the basis of the last purchase unit cost. Alternatively, excess goods received at cost for pre-delivered goods are invoiced to pharmaceutical companies as service cost. When no goods are shipped in return by pharmaceutical companies, a service cost invoice is issued by the Group for the pre-delivered excess goods receivables and taken into records. Sales Premium: Sales premiums which consist of promotions received based on sales and purchase amounts agreed with pharmaceutical companies are recognized in other revenue. Interest Income Interest income is accrued on the basis of the effective interest method, which brings the remaining principal amount and the estimated cash inflows to be acquired over the expected life of the financial asset to the net book value of the related asset. Interest income and foreign exchange gains on trade transactions are recognized as other income from operating activities. Dividend Income Dividend income from equity investments is reflected to the consolidated financial statements when the shareholders’ right to receive dividends arises. Dividend payables are recognized in the consolidated financial statements as a part of the profit distribution after the approval of the General Assembly. Provisions, contingent assets and contingent liabilities Provisions are recognized when there is an existing obligation arising from past events, it is probable that the obligation will be settled and if the amount of the liability in question is reliably predictable. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties associated with the obligation. If the provision is measured using the estimated cash flows required to cover the present obligation, the carrying amount of the provision is equal to the present value of the related cash flows. In cases where it is expected that some or all of the economic benefit required for payment of the provision will be covered by third parties, the amount to be collected is recognized as an asset when the relevant amount is almost certain to be collected and measured reliably.