BIRLESIM_2021_ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2021 ANNUAL REPORT 157 Birleşim Mühendislik Isıtma Soğutma Havalandırma Sanayi Ticaret A.Ş. and Its Subsidiary (All amounts expressed in Turkish Lira (“TL”)) Notes to the Consolidated Financial Statements For the Year Ended 31 December 2021 2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (k) Summary of Significant Accounting Policies (continued) Revenue (continued) The Group includes revenue from the following sources in its consolidated financial statements: Construction Contracts of machanical and electric Long-term construction works undertaken as contractor on construction contracts are recognized on the percentage of completion method. Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognized. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract. This rate is part of the financial statements of the current period of contract revenue is used for recording. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable that such costs are recoverable. Contract costs are recognized as expenses in the period in which they are incurred. Interest Income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Rental income Rental income from investment properties is recognized on a straight-line basis over the term of the relevant lease. Retention Receivables Held by Contractors The Group’s interim progress billings from its clients are subject to retention deductions, which vary, based on the individual agreements. These balances are collected from the clients upon completion of the contract at the end of the warranty period. Retention receivables are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method. Retention Payables to Subcontractors Interim progress billings by its subcontractors to the Group may be subject to retention deductions, which vary, based on the individual agreements. These payables are paid to subcontractors after they complete the guarantee periods. Retention payables are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method.