208
PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.12 Revenue
(i)
Rental income
Rental income from investment properties is recognised in profit or loss on a straight-line basis over the term of the
lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
Contingent rentals, which include gross turnover rental, are recognised as income in the accounting period in which
they are earned.
(ii)
Sale of properties under development
Revenue from sales of properties under development is recognised by reference to the stage of completion using the
percentage of completion method when the Group determines that (a) control and the significant risks and reward of
ownership of the work-in-progress transfer to the buyer in its current state as construction progresses, (b) the sales
price is fixed and collectible, (c) the percentage of completion can be measured reliably, (d) there is no significant
uncertainty as to the ability of the Group to complete the development, and (e) costs incurred or to be incurred can
be measured reliably.
In all other instances, revenue from sales of development properties is only recognised upon the transfer of control
and significant risks and rewards of ownership of the property to the buyer. This generally coincides with the point in
time when the development unit is delivered to the buyer. No revenue is recognised when there is significant
uncertainty as to the collectability of consideration due or the possible return of units sold.
The percentage of completion is measured by reference to the work performed, based on the ratio of construction
costs incurred to date to the estimated total construction costs. Profits are recognised only in respect of finalised
sales contracts to the extent that such profits relate to the progress of the construction work.
(iii)
Dividend income
Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is established,
which in the case of quoted securities is normally the ex-dividend date.
(iv)
Acquisition fee and divestment fee
Acquisition and divestment fee are recognised in profit or loss when acquisition or divestment of real estate or equity
interests of any vehicle holding directly or indirectly the real estate are completed.
(v)
Fee income from real estate management services
Fee income from real estate management services is recognised in profit or loss when services are rendered.
(vi)
Leasing fee
Leasing fee is recognised in profit or loss when a new lease is secured and/or when an existing lease is renewed.
3.13 Finance income and finance costs
Finance income comprises interest income on loans and receivables. Interest income is recognised as it accrues in profit
or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective
interest method.
