160 F INANC IAL Statements 05 Sect ion Ranhi ll Ut i l i t i es Berhad NOTES TO THE F INANC I AL STATEMENTS For the year ended 31 December 2022 3. SIGNIFICANT ACCOUNTING POLICIES (contd.) Revenue from contracts with customers and other revenue (contd.) (e) Recognise revenue when (or as) the Group and the Company satisfy a performance obligation. (contd.) The following describes the performance obligation in contracts with customers: (contd.) (e) Special works and services Revenue on special works and services is generated from repair works, reconnection fees and other related works charged to consumers. The Group recognises revenue at a point in time upon performance of services. (f) Sale of equipment Revenue from sale of equipment is recognised at a point in time when control of the asset is transferred to the customer, generally on delivery on equipment. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. (g) Construction contract revenue For construction contracts, the Group is responsible for overall management of the project and identifies various goods and services to be provided, including design work, procurement of materials, site preparation, installation of equipment and testing and commissioning relating to water treatment plants. In such contracts, the Group provides significant integration service and will generally account for them as a single performance obligation. Revenue is recognised over time using the input method as it has enforceable right to payment for performance completed to-date. The customer pays the fixed amount based on a payment schedule. If the services rendered by the Group exceeds the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised. (h) Operation and maintenance revenue The Group constructs or upgrades an existing infrastructure to provide services to operate and maintain the infrastructure (operation services) for a specified period of time. The Group applies the practical expedient of recognising revenue in the amount to which the Group has a right to invoice if it corresponds directly with the value to customer of the Group’s performance that is completed to date. (i) Technical and management services Revenue from providing technical and management services is recognised at a point in time when services are rendered. (j) Engineering services revenue The Group performs various engineering and project management and delivery services. These activities are highly integrated and meet the criteria of a series of distinct services as the services are substantially the same and have the same pattern of transfer to the customers. Accordingly, they are accounted for as a single performance obligation.
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