NOTES TO THE INTERIM FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New standards adopted
On 1 July 2018 the following accounting standards were adopted: i) NZ IFRS 15: Revenue from Contracts with Customers ii) NZ IFRS 16: Leases NZ IFRS 15: Revenue from Contracts with Customers The group has adopted NZ IFRS 15 Revenue from Contracts with Customers , effective from 1 July 2018, using the cumulative retrospective approach. The cumulative effect from adoption (if any) is recognised at the date of transition, which is 1 July 2018. NZ IFRS 15 provides an entity with guiding principles on when, how, and how much revenue to recognise in an entity’s financial statements in any given reporting period. The standard and its subsequent amendment replace all existing IFRS guidance for revenue recognition. The application and adoption of NZ IFRS 15 to the group’s revenue streams has not had a significant impact on the group’s financial performance or financial position. The group did not apply any practical expedients available in NZ IFRS 15. Details of the new significant accounting policies under NZ IFRS 15 in relation to the group’s key revenue streams are set out below.
Key revenue streams
Significant accounting policies
Impact from NZ IFRS 15 adoption
None
Electricity and gas distribution services are measured at fair value, to the extent that pricing is determined by the regulator in accordance with a matrix of determinations. Revenue is recognised over time using an output method. The right to payment corresponds directly with the customers’ pattern of electricity and gas consumption. Third party contributions towards the construction of property, plant and equipment are recognised over time, reflecting the percentage completion of the underlying construction activity or the performance obligation if the activity is bundled with other distinct goods or services. A contract liability is presented on the balance sheet representing that portion of consideration received from the customer on acceptance of a contract but that the performance obligation associated with the contract is not yet satisfied. This liability was previously disclosed as a part of trade and other payables.
Electricity and gas distribution services
The timing of revenue recognition has changed for some construction contracts. The cumulative effect of $6.6 million (net of tax) from initially applying IFRS 15 is adjusted to opening retained earnings. The impact on the profit or loss is a $0.6 million increase in revenue.
Third party contributions
38
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