Sample Disclosure – Accounting Policy On Revenue Recognition (10 September 2009)

Revenue Recognition 

Revenue is measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns.

Sale of goods

Revenue from sale of goods is recognised when the following conditions are satisfied:

  • the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
  • the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
  • the amount of revenue can be measured reliably;
  • it is probable that the economic benefits associated with the transaction will flow to the entity; and
  • the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Dividend and interest income

Dividend income represents gross dividends from unquoted investments and is recognised when the shareholder’s rights to receive payment is established. Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

Rental income

Rental income is accrued on a time basis, by reference to the agreements entered.

Sample Disclosure – Revenue Recognition (2 December 2008)

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

i. Sale of goods

Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

ii. Project management fees

Management fees are recognised when the services are rendered.

iii. Rental income

Rental income from operating leases and investment properties is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.

iv. Interest income

Interest income is recognised on an accrual basis using the effective interest method.

v. Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.