Page 249 - PWA_2023_Annual_Report

Provincial Waterworks Authority Annual Report 2023 247

3. Significant Accounting Policies (Cont.)
3.18 Provisions of Demolished Costs on Building and Construction
The present value of the estimate on the demolishment is calculated by zero-coupon yield
curve and SOE spread matrix (risk premium) at the end of accounting period which records the assets on
land for rent at the discounted rate.
In this regard, PWA uses the prospective adjustment since PWA is unable to specify information
and the amount of demolition costs in the past, which is the cumulative effect of previous periods resulting

from changes in accounting policies.
3.19 Revenue Recognition
3.19.1 Revenue from water supply and service is recognized as income when issuing the receipt
and invoice of water supply based on the amount of consumption in each month.
3.19.2 Revenue from installation of water meter amortization is the cost of installing water meters
received from private and government water users, shown in the advance payment account for installation
and piping installation and recorded as income for the water meter installation waiting to be recognized

as liabilities when the work is completed. It is gradually recognized as revenue from installation of water
meters, amortized in the statements of comprehensive income at the rate of 12.5% per year according to
the useful life of the water meter. The cost of water meter installation works that are not completed yet
will be shown in the installation and piping work during operation.
3.19.3 Amoritized income from piping for water distribution area expansion is the cost of
piping for the water distribution area expansion received from each public and private water users shown
in advance receipt account of piping and installation, and recorded as deferred revenue from piping for
water distribution area expansion in respect of liabilities after work completion. This is gradually recognized
as the amortized income of water distribution area expansion in the statement of comprehensive income

at the rate of 3.33 percent per year according to the useful life of the piping work. Cost of piping and
installation for the water distribution area expansion that has not been completed will be displayed in the
“Installation and Piping Works under Construction”. This includes rural waterworks construction cost received
from government contributions shown as deferred income from government contributions and gradually
recognized as amortized income from government contributions over the useful lives of assets.
3.19.4 Penalty income In case sellers or parties to a contract with PWA (contractors) delay
in delivering job as specified in the contract, penalty is charged and recognized as penalty income.

If the contract is renewed in the fiscal year in which penalty is deducted, the refund will be used to reduce
the penalty income. But if the contract is renewed in the next fiscal year, it will be recognized as an expense
in the accounting period that is being repaid and shown as a deduction item in other income.
3.19.5 Interest income is recognized in accordance with the proportion of time in consideration
of the effective rate of return on assets.
3.19.6 Dividend income is recognized as income when the declaration of dividend is made.
3.19.7 Other income is recognized as income when receiving the settlement.
3.19.8 Revenue from private sector donation Donation transactions from private sector in
the form of cash and land including fixed supplies are recognized as income in the whole amount for the

period of occurrence