ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 155 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ESR Annual Report 2019 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. 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.