ESR Group Limited Annual Report 2023 157 Notes to the Consolidated Financial Statements 31 December 2023 2.4 MATERIAL ACCOUNTING POLICIES (continued) Revenue from contracts with customers (continued) Solar energy income Solar energy income is recognised based on direct measurements of the value to the customer of the services transferred to date according to contracts with the customer. Revenue are recognised based on price specified in the contracts and output delivered to customers. Construction income Construction income is recognised in accordance with the percentage of completion method measured by reference to the proportion of costs incurred to date to the estimated total cost of the relevant contract. The stage of completion is measured by reference to the completion of specific milestones in the construction process. On completion of each milestone, the recoverable costs incurred during the period plus the related fee earned corresponding to the particular milestone are recognised as revenue. Revenue from other sources Rental income Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue. Interest income Interest income is accounted for on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Dividend income Dividend income is recognised when the company’s right to receive payment is established. Contract assets If the Group performs by transferring goods or services to a customer before being unconditionally entitled to the consideration under the contract terms, a contract asset is recognised for the earned consideration that is conditional. Contract assets are subject to impairment assessment, details of which are included in the accounting policies for impairment of financial assets. They are reclassified to trade receivables when the right to the consideration becomes unconditional. Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the Group has received a consideration (or an amount of consideration that is due) from the customer. If a customer pays the consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract. CORPORATE GOVERNANCE FINANCIAL STATEMENTS STRATEGIC REPORTS
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