PEILCC 2023 Annual Report

PRINCE EDWARD ISLAND LIQUOR CONTROL COMMISSION Notes to Financial Statements Year Ended March 31, 2023

4. SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition Revenue is derived from the sale of goods and other income from the rendering of services. Revenue is measured by reference to the fair value of the consideration received or receivable by the Commission for the goods or services supplied, exclusive of sales tax, deposits, and health tax. 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 the Commission transfers control of the goods to the customer. Other income includes permit, license, marketing fees, and limited time offer promotions. Income from permits and license fees are recognized when they can be reliably measured and the associated right to sell or produce beverage alcohol has been utilized. Income from marketing fees are recognized when the amount of income can be reliably measured and it is probably that economic benefits will flow to the Commission. Marketing fees are earned during the nine marketing periods of the fiscal year. Any variable amounts due can be reliably measured at the end of each marketing period. All other income amounts can be reliably measured at the beginning of the marketing period. All incremental costs of the programs are the responsibility of the supplier. Marketing fees do not span multiple fiscal years resulting in no restatement of prior fiscal years for contract revenues under marketing fees. The Commission sells gift cards to its customers and initially records the amount to deferred revenue. Income is recognized as the gift cards are redeemed. If, in the opinion of management, the likelihood of the gift card balance not being redeemed is highly probably, then the income will be recognized at that time. Expenses Expenses are recognized on an accrual basis in the period in which the transaction or event that gave rise to the expense occurred. Significant accounting judgments and estimates The preparation of financial statements in accordance with IFRS requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, income, and expenses. The actual results may materially differ from management's estimation. Items requiring the use of significant estimates include useful lives of property and equipment, inventory values, accrued liabilities, legal contingencies and impairment. The estimates and underlying assumptions are reviewed on an ongoing basis based on historical experience, best knowledge of current events and conditions and other factors that are believed to be reasonable under the circumstances, including expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results, and actual results may ultimately differ from these estimates. Revisions to accounting estimates are recorded in the period in which the estimate is reversed if the revision affects only that period or in the period of revision and in future periods if the revision affects both the current and future periods. Future changes in significant accounting policies A number of new standards and amendments to standards and interpretations are not yet effective for the year ended March 31, 2023 and have not been adopted by the Commission in preparing these financial statements. These changes are not expected to have a material impact on the Commission's financial statements.

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PEILCC 2022-2023 Annual Report