3.6Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts of goods sold and services provided in the normal course of business, net of discounts and sales related taxes, if any.
Electricity sales income
When the Group owns and operates solar parks for the purpose of generating income from the sale of electricity over the life of the solar parks, electricity generation income is classified as revenue. When electricity income is generated from solar parks which the Group holds as inventories, the electricity income is considered incidental and classified as other operating income. Electricity generation income is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.
EPC services solar energy system sales - Provision of pipeline plus EPC services
The provision of Pipeline plus EPC services involves application of permits, sourcing of solar modules, and provision of construction services.
The Group either applies for the permits required to construct and operate solar parks itself or acquires the permits through the acquisition of the equity interests in project companies, which are typically formed for the specific purpose of holding such permits. In the course of providing Pipeline plus EPC services, the Group sells the permits to customers through the disposal of project companies holding the relevant permits. Revenue from disposing project companies holding permits is recognized when equity interests in the relevant project companies are transferred to customers by the Group at which time control is transferred.
In addition to revenue from sales of permits as discussed above, the Group also enters into separate contracts with customers for sourcing of modules and provision of construction services for their project companies if it is requested by the customers. Revenue from modules sourced and provision of construction service is recognized in accordance with sales of solar modules and construction contract discussed below.
EPC services solar energy system sales - Build and transfer of solar parks
Revenue from BT represents the sale of completed solar parks and is recognized when titles to the solar parks have been transferred at which point control is passed to the customer.
Other sales - Sales of solar modules
Revenue from the sales of solar modules is recognized when the modules are delivered and titles have passed.
Solar modules are considered delivered and their titles have passed, at the point at which all the following conditions are satisfied:
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the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; |
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the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; |
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the amount of revenue can be measured reliably; |
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it is probable that the economic benefits associated with the transaction will flow to the Group; and |
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the costs incurred or to be incurred in respect of the transaction can be measured reliably. |
Other sales — O&M service
Income from provision of O&M service and other administrative service is recognized when services are provided.
Others
Interest income from financial assets is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.