AL-SALAM REIT ANNUAL REPORT 2019

Revenue recognition Rental income Rental income is recognised based on the accrual basis unless collection is in doubt, in which case it is recognised on the receipt basis. Rental income from fixed rent is recognised on a straight line basis over the shorter of the entire lease term or the period to the first break option. Where such rental income is recognised ahead of the related cash flow, and adjustment is made to ensure the carrying value of the related property including the accrued rent does not exceed the external valuation. (a) Gross rental income Revenue from rental of investment properties, including service charges, are recognised on a straight line basis over the period of the lease term in accordance with terms and conditions of the tenancy agreement between the Group and its tenants. (b) Percentage rent Rental income earned from certain tenants include percentage rent clauses whereby rent received and/or receivable is the higher of base rent and a percentage of sales earned by the tenant during the financial year. Percentage rent is recognised when it can be reliably measured by the Group. Others Revenue is measured based on the consideration specified in a contract with a customer and exclude amounts collected on behalf of third parties. The Group or the Fund recognises revenue when or as it transfer control over a product or service to customer. An asset is transferred when (or as) the customer obtains control of the asset. An entity transfer control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met: (i) The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs; or (ii) 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; or (iii) 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 payment completed to date. If a performance obligation is not satisfied over time, an entity satisfied the performance obligation at a point in time. (a) Parking income and events and advertising income Parking income and events and advertising income are recognised on an accruals basis in the accounting period in which the services are being rendered. (b) Investment income Investment income, which comprise income earned from Islamic fixed deposit placements, are recognised on an accrual basis. AL-SALĀM REIT • 118 ANNUAL REPORT 2019 For The Financial Year Ended 31 December 2019 (Cont’d) Notes To The Financial Statements