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PRINCE EDWARD ISLAND
LIQUOR CONTROL COMMISSION
Notes to Financial Statements
March 31, 2015
3.
Summary of Significant Accounting Policies (continued...)
C)
Revenue Recognition (continued...)
Sales
Revenue from the sale of goods is recognized when the amount of revenue can be
reliably measured, collection is probable, the costs incurred or to be incurred can be
reliably measured, and when significant risks and rewards of ownership have been
transferred to the buyer.
Significant risks and rewards are generally considered to be transferred to the buyer
when the customer has taken legal title and possession of the goods and contractual
obligations have been met.
Other Income
Other income includes permit, license, and marketing fees, and limited time offer
promotions. Revenue from other income is recognized when the amount of revenue can
be reliably measured, it is probable that economic benefits will flow to the Commission,
the stage of completion can be reliably measured, and the costs incurred to date and the
costs required to complete the transaction can be reliably measured.
Deferred Revenue
The Commission sells gift cards to its customers and initially records the amount to
deferred revenue. Revenue is recognized as the gift cards are redeemed. If, in the
opinion of management, the likelihood of the gift card being redeemed is remote then the
revenue will be recognized immediately.
d) Expenses
Expenses are recorded on an accrual basis in the period in which the transaction
or event that gave rise to the expense occurred.
e) Inventory
Inventory is
valued at
the lower of cost or net realizable value on
a
first-in, first-out basis.
Inventory costs include the purchase price, duty and excise taxes, and standard freight
rates for goods received.