Aldar Properties PJSC – Annual report – 31 December 2015
Industry: real estate
2.1 STANDARDS ISSUED AND ADOPTED (extract)
The Group applied certain standards, interpretations and amendments for the first time, which are effective for annual periods beginning on or after 1 January 2015. The Group has also opted for the early adoption of IFRS 15 ‘Revenue from Contracts with Customers’ resulting in a change in the revenue recognition policy of the Group in relation to its contracts with customers. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The application of these new standards, interpretation and amendment, other than IFRS 15, did not have a material impact on the annual consolidated financial statements of the Group. The nature and the impact of each new standard, interpretation and amendment is described below:
IFRS 15 Revenue from contracts with customers
The Group has opted for the early adoption of IFRS 15 ‘Revenue from Contracts with Customers’ resulting in a change in the revenue recognition policy of the Group in relation to its contracts with customers (refer to Note 3.7 for new accounting policy).
IFRS 15 was issued in May 2014 and is effective for annual periods commencing on or after 1 January 2018, with early adoption permitted. IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue guidance, which is found currently across several Standards and Interpretations within IFRSs. It established a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The Group has reviewed the impact of IFRS 15 on all its business segments and has elected to early adopt IFRS 15, with effect from 1 January 2015. The Group has opted for the modified retrospective application permitted by IFRS 15 upon adoption of the new standard. Accordingly, the standard has been applied for the year ended 31 December 2015 only (i.e. the initial application period).
Modified retrospective application also requires the recognition of the cumulative impact of adoption of IFRS 15 on all contracts as at 1 January 2015 in equity. The details of adjustments to opening retained earnings and other account balances as at 1 January 2015 is detailed below.
The below table represents impact on revenue, cost of revenue and net profit for the period, had the earlier policy for revenue recognition been continued during the period: