Interest income–The company recognizes interest revenue on an accrual basis by taking into account the outstanding principal and the effective interest rate. The company discounts the estimated future cash flows at the applicable interest rate through the expected life of the financial asset. Thus the interest income is affected by accruals (JB Hi-Fi Annual report, 2014).
Revenue- Revenue from a contract to provide services is recognized as per the stage of completion of the contract. Revenue from time and material contracts is recognized at the contractual rates as labour hours are delivered and direct expenses are incurred.(1)
Dividend receivable- The company recognizes dividends as revenue when the right to receive payment is established. This also applies in case of pre-acquisition profits.
Lease – The company classifies an asset as a finance lease when the lease substantially transfers the risks and rewards of ownership. Else, the lease is classified as operating lease. The lease expense is affected by accruals depending on the lease payment contract.