Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Construction contracts
When the outcome of construction contracts can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion at the end of the reporting period.
Reliable estimation of the outcome of construction contracts requires reliable estimates of the stage of completion, future costs and collectability of billings. The stage of completion is measured by surveys of work performed.
When the outcome of a construction contract cannot be estimated reliably, revenue is only recognised to the extent of contract costs incurred that it is probable will be recoverable.
When it is probable that the total contract costs will exceed total contract revenue on a construction contract, the expected loss shall be recognised as an expense immediately, with a corresponding provision for an onerous contract.
Revenue in respect of variations to contracts and incentive payments is recognised when it is probable it will be agreed by the customer.