PASHA BANK ANNUAL REPOT 2024

EXPLANATIONS ON ACCOUNTING POLICIES (Continued) XII. EXPLANATIONS ON PROPERTY AND EQUIPMENT (Continued) Expenditures for the regular repair and maintenance of property and equipment are recognised as expense. The capital expenditures made in order to increase the capacity of the tangible asset or to increase its future benefits are capitalised on the cost of the tangible asset. The capital expenditures include the cost components which are used either to increase the useful life or the capacity of the asset, or the quality of the product or to decrease the costs. There is no pledge, mortgage or commitment on the Bank’s property and equipment. XIII. EXPLANATIONS ON INVESTMENT PROPERTIES Land and buildings held for the purpose of earning rent, capital appreciation, or both, rather than being used in the production of goods and services, for administrative purposes, or for sale in the ordinary course of business, are classified as investment properties. Investment properties are initially recognized at cost. The cost includes expenses incurred in acquiring the investment property as well as any subsequent additions, modifications, or service costs related to the investment property. After initial recognition, the bank reflects these properties in the records by deducting the accumulated depreciation and any impairment, if applicable, from the cost. Investment properties are subject to periodic impairment tests. Depreciation for investment properties, specifically buildings, is calculated using the straight-line method over a useful life of fifty years. Gains or losses in the case of disposal of an investment property; is the difference between the net selling price of the asset sold and the carrying amount of the property and is recognized as profit or loss on sale of investment property in the period of disposal. XIV. EXPLANATIONS ON LEASING TRANSACTIONS Assets acquired under finance lease agreements are capitalised at the inception of the lease at the “lower of the fair value of the leased asset or the present value of the amount of cash consideration given for the leased asset”. Leased assets are included in the property and equipment and depreciation is charged on a straight-line basis over the useful life of these assets. If there is any impairment in value of the leased asset an impairment loss is recognised. Liabilities arising from the leasing transactions are included in “Financial Lease Payables”. Interest and foreign exchange expenses regarding lease transactions are charged to the income statement. The Bank can engage in financial lease transactions as the lessor. The Bank records the gross amount of minimum lease receivables comprising of principal and interest amounts as “financial lease receivables” under lease receivables account. The difference between the aggregate of lease receivables and the cost of the related leased assets, corresponding to interest, is recorded under “unearned income” item. The interest income is recognised in the income statement on an accrual basis. The “TFRS 16 Leases” Standard was published in the Official Gazette numbered 29826 on 16 April 2018, to be applied effective from 1 January 2019. Under the TFRS 16 Leases (“TFRS 16”) standard, the Bank recognizes all lease transactions in the balance sheet, except for short-term leases and leases of low-value assets. 150 PASHA Yatırım Bankası A.Ş. Notes to the Unconsolidated Financial Statements As of and for the Year Ended 31 December 2024 (Continued) PASHA Bank 2024 Annual Report (Convenience translation of publicly announced financial statements originally issued in Turkish) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)