Urban Renewal Authority 2018-19 Annual Report

125 (expressed in Hong Kong Dollars) NOTES TO THE FINANCIAL STATEMENTS 2. Significant accounting policies (Continued) (b) Relevant standards, amendments to standards and interpretations effective in the current year (Continued) (ii) HKFRS 15, Revenue from contracts with customers HKFRS 15 establishes a comprehensive framework for recognising revenue and some costs from contracts with customers. HKFRS 15 replaces HKAS 18, Revenue , which covered revenue arising from sale of goods and rendering of services, and HKAS 11, Construction contracts , which specified the accounting for construction contracts. HKFRS 15 also introduces additional qualitative and quantitative disclosure requirements which aim to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. There is no significant impact on the Group’s financial position and financial result upon initial application at 1 April 2018. Comparative information continues to be reported under HKAS 18. Further details of the nature and effect of the changes on previous accounting policies are set out below: a. Timing of revenue recognition Previously, revenue arising from provision of services was recognised over time, whereas revenue from sale of goods was generally recognised at a point in time when the risks and rewards of ownership of the goods had passed to the customers. Under HKFRS 15, revenue is recognised when the customer obtains control of the promised good or service in the contract. This may be at a single point in time or over time. HKFRS 15 identifies the following three situations in which control of the promised good or service is regarded as being transferred over time: A. When the customer simultaneously receives and consumes the benefits provided by the entity’s performance, as the entity performs; B. When the entity’s performance creates or enhances an asset (for example work in progress) that the customer controls as the asset is created or enhanced; C. When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the contract terms and the entity’s activities do not fall into any of these 3 situations, then under HKFRS 15 the entity recognises revenue for the sale of that good or service at a single point in time, being when control has passed. Transfer of risks and rewards of ownership is only one of the indicators that is considered in determining when the transfer of control occurs. The adoption of HKFRS 15 does not have a significant impact on when the Group recognises revenue from sale of properties.