AL-SALAM REIT ANNUAL REPORT 2017

142 AL-SALĀM REIT ANNUAL REPORT 2017 overdrafts, if any, are deducted and excludes amounts which are restricted for general use. Segment Reporting For management purposes, the Fund is organised into operating segments based on industry which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the Manager of the Fund who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 23, including the factors used to identify the reportable segments and the measurement basis of segment information. 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Fund’s accounting policies, which are described in Note 3, the Manager is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. 4.1 Critical Judgements in Applying the Fund’s Accounting Policies In the process of applying the Fund’s accounting policies, the Manager is of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements other than disclosed below: (a) Recognition of percentage rent In accordance with the accounting policies of the Fund, as stated in Note 3, revenue is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the revenue can be reliably measured. Certain tenancy agreements between the Fund and its tenants contain clauses as to percentage rent whereby rent received and/or receivable by the Fund is the higher of (i) the base rent as determined in the tenancy agreement and (ii) a percentage of sales revenue earned by the tenant during the financial year. For the financial year ended 31 December 2017, the Manager assessed the appropriateness of recognising revenue from percentage rent against the accounting policies of the Fund by considering the availability of tenants’ audited financial statements and historical sales trends. The Fund only recognises percentage rent revenue to the extent financial information is available for the Manager to make a reliable estimate. NOTES TO THE FINANCIAL STATEMENTS - CONT’D