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2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Summary of significant accounting policies (cont’d)
(o) Revenue recognition (cont’d)
(iv) Premium income
Premium income is recognised as income in the financial year in respect of risks assumed during that particular
financial year. Method of deferral of premium income is as stated in Note 2.4(l).
Premium income from reinsurance is recognised based on periodic advices received from ceding insurers.
(v) Islamic income recognition
Income from financing and receivables is recognised in the statements of income 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
Fee income from processing fee arrangement, facility fee and upfront fee is recognised on an accrual basis. Fee
income is also derived from Kafalah contract.
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.
NOTESTOTHEFINANCIALSTATEMENTS
31 DECEMBER 2013
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EXIM Bank Annual Report 2013