Page 129 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCING FINANCIAL
TO SERVE TO LEAD GROWTH SUSTAINABILITY GOVERNANCE STATEMENTS 127

Notes to the fiNaNcial statemeNts

2. sIGNIFICANt ACCouNtING PoLICIes (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)

(n) Revenue recognition (cont’d.)
(v) Islamic income recognition

Income from financing and receivables is recognised in the statement of profit or loss using the effective profit
method. The effective profit rate is the rate that discounts the estimated future cash payment and receipts
through the expected life of the financial asset or liability to the carrying amount of the financial asset or
liability. The calculation of the effective profit rate includes all contractual terms of the financial instrument and
includes any fees or incremental costs that are directly attributable to the instrument and are an integral part
of the effective profit rate.

Murabahah, Tawarruq and Istisna’
Murabahah/Tawarruq and Istisna’ income are accrued on monthly basis on the cost outstanding at the prevailing
effective profit rate over the duration of the financing.
Ijarah

Ijarah income is recognised on the effective profit rate of the cost of the leased asset over the leased period.
Bai’ Al Dayn
Bai’ Al Dayn income is recognised monthly on the effective discount rate on the purchase price of the invoice
over the duration of the financing.
Fee income earned from services that are provided over a certain period of time

Fees earned for the provision of services over a period of time are accrued over that period. These fees include
upfront, facility and Kafalah contract fees.

Takaful income
The source of Takaful income is derived from Takaful contributions. Income is recognised based on specific
percentage of the contribution amount from participants. The remaining amount is placed in Risk Fund which
is pooled for underwriting purposes.
Takaful income from retakaful is recognised based on periodic advices received from ceding takaful operators.

(o) Income tax
Income tax on the profit or loss for the year comprises current and deferred taxes. Current tax is the expected
amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rate that
has been enacted at the reporting date.
Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences,
unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the
initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.