Registration No. 200301030845 (633265-K) - 55 - 3. Significant Accounting Policies (Cont’d) (r) Revenue recognition (i) Revenue from contracts with customers Revenue is recognised when the Group or the Company satisfied a performance obligation (“PO”) by transferring a promised good or services to the customer, which is when the customer obtains control of the good or service. A PO may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied PO. The Group and the Company recognise revenue from the following major sources: (a) Revenue from construction contracts and project works The revenue from construction contracts is measured based on the transaction prices net of expected liquidated ascertained damages (“LAD”) payment. LAD is determined based on the expected value method. The Group recognises revenue from construction contracts and project works over time by reference to the progress towards complete satisfaction at the end of the reporting period when control over the asset has been transferred to the customers. The assets have no alternative use to the Group due to contractual restriction and the Group has an enforceable right to payment for performance completed to date. Revenue from construction contracts and project works is measured at the transaction price agreed under the construction contracts and project works. Progress towards complete satisfaction is measured based on input method, which is to recognise revenue on the basis of the Group’s efforts or inputs to the satisfaction of a performance obligation (i.e. contracts costs incurred for works performed to date) relative to the total expected inputs to the satisfaction of that performance obligation (i.e. total estimated contract cost), that best depict the Group’s performance in transferring control of goods or services. The Group becomes entitled to invoice customers for construction of promised asset based on achieving a series of performance-related milestones (i.e. progress billing). The Group previously has recognised a contract asset for any work performed. Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. If the progress billing exceeds the revenue recognised todate, the Group recognises a contract liability for the difference. There is not considered to be a significant financing component in contracts with customers as the period between the recognition of revenue and the progress billing is always less than one year. 133 ANNUAL REPORT 2022 DESTINI BERHAD
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