| 2.2.30 | Revenue recognition |
Revenue comprises the fair value of the remuneration received or to be received for the sale of products and services in the normal course of business. Revenue is presented net of taxes, returns, reductions and discounts, and in the consolidated financial statements, after eliminating intercompany sales.
| a) | Revenue from aircraft, spare parts and services |
Revenues from sales and services are recognized when the risks and rewards are transferred to the customer and when all the conditions for recognition are met. Revenues from sales of commercial, executive and other aircraft and spare parts are generally recognized at the time of delivery or shipment and revenue from services is recognized when the service is provided.
When the sale of aircraft does not meet the contractual obligations at the time of delivery, the related revenue is deferred and accounted for as unearned income until the obligations are met.
| b) | Revenue from sale of services |
Revenues from the sale of services are recognized when the risks and significant benefits are transferred to the customer, that is, to the extent that the services are rendered.
| c) | Revenue with multiple elements |
Aircraft sale arrangements may provide for supply of spare parts, training, technical assistance, spare parts and other concessions, which may or may not be delivered together with the aircraft. Such revenues are recognized at fair value when the product or service is provided to the customer.
| d) | Revenue from Exchange Pool Program |
Revenue from the Exchange Pool Program is recognized monthly over the contract period and consists of a fixed charge and a variable charge directly related to the hours effectively flown by the aircraft under the program.
| e) | Revenue from construction contracts |
In the Defense & Security segment, certain operations are classified as long-term contracts, revenue from which is recognized by the percentage-of-completion (POC) method, through incurred costs or physical progress. Some contracts contain provisions for price adjustment based on pre-established indices, and these are recognized on an accrual basis. The adjustments of revenue recognition relating to sales of the Defense & Security segment contracts is based on Management’s best estimates as they become evident.
| f) | Revenue from operating leases |
The Company also recognizes the revenue from aircraft rental as operating leases, proportional to the lease period.