ENRA Group Berhad Annual Report 2020

ENRA Group Berhad - Annual Report 2020 119 NOTES TO THE FINANCIAL STATEMENTS 31 March 2020 27. REVENUE (Cont’d) a. Sale of goods Revenue from sale of goods is recognised at a point in time when the products have been transferred to the customer and coincides with the delivery of products and acceptance by customers. Some contracts for the sale of goods provide customers with a right of return the goods within a specified period. Under MFRS 15, the consideration received from the customer is variable because the contract allows the customer to return the products. The Group uses the expected value method to estimate goods that will not be returned. There is no significant financing component in the revenue arising from sale of goods as the sales are made on the normal credit terms not exceeding twelve months. b. Logistic and energy services income Logistic and energy services income is recognised at a point in time and over time depending on the nature of the services. The income is recognised at a point in time when the products have been transferred or the services have been rendered to the customer and coincide with the delivery of products and services and acceptance by customers. The income is recognised over time as income when the customers receives and consumes the benefits. c. Revenue from property development and construction contracts Contracts with customers include multiple promises to customers and therefore accounted for as separate performance obligations. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. When these are not directly observable, they are estimated based on expected cost plus margin. Revenue from property development and construction contracts is measured at the fixed transaction price agreed under the agreement. Revenue is recognised as and when control of the asset is transferred to the customer and it is probable that the Group would collect the consideration to which it will be entitled in exchange for the asset that would be transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if the performance of the Group does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. If control of the asset transfers over time, revenue is recognised over the period of the contract using the input method by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset. Significant judgement is required in determining performance obligations, transaction price allocation and costs in applying the input method to recognise revenue over time. The Group identifies performance obligations that are distinct and material, which is judgmental in the context of contract. Transaction prices were determined based on estimated margins prior to its allocation to the identified performance obligation. The Group also estimated total contract costs in applying the input method to recognise revenue over time. d. Leasing Revenue from operating lease is recognised over time throughout the leasing period. While, the revenue from finance lease is recognised over time throughout the leasing period and subsequently transfer the ownership of the asset to the lessee.