2015_LCC Annual Report

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.