3. Significant accounting policies (continued):

(h) Deferred revenue:

Certain customers and developers are required to contribute towards the capital cost of construction in order to provide a new service. These contributions fall within the scope of IFRS 15 Revenue from Contracts with Customers. The contributions are received to obtain a connection to the distribution system in order to receive ongoing access to water. The Commission has concluded that the performance obligation is the supply of water over the life of the relationship with the customer which is satisfied over time as the customer receives and consumes water. Cash contributions are initially recorded as current liabilities.

Once the distribution system asset is completed or modified as outlined in the terms of the contract, the contribution amount is transferred to a customers' capital contribution account.

When an asset is received as a capital contribution, the asset is initially recognized at its fair value, with the corresponding amount recognized in the customers' capital contribution account.

The customers' capital contribution account, which represents the Commission's obligation to provide the customers access to water, is reported as deferred revenue and is amortized to income on a straight-line basis over the economic useful life of the acquired or contributed asset.

(i) Revenue:

IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognized.

Revenue for the Commission is recognized when the Commission satisfies the performance obligations within the contract(s) for conditions of service, which is when the delivery of water is achieved or specific services are performed.

Revenue is measured at the fair value of the consideration received or receivable, net of any taxes which may be applicable.