Page 105 - PEA_AnnualReport_2016

Ot r ong-t r p o n fits
Provincial Electricity Authority has given a welfare for employees who work for the complete
agreed period as other long-term employee benefts. rovincial lectricity uthority recorded these employee
benefts by using pro ected unit credit method which are calculated by the actuary.

3.18 Technology research and development fund
Provincial Electricity Authority has established technology research and development fund, according to the
policy of the ffce of the ational conomic and Social evelopment oard, to continuously promote and support
existing and new technology research and development in highly effcient manner. The fund aims to reduce
the dependence and importation of technology from abroad. Consequently, Provincial Electricity Authority is able
to apply the results of research and development to its operations in the highest effciency. rovincial lectricity
Authority has contributed from its budget as a fund granted to domestic educational institutions, domestic research
and development institutions and business units within Provincial Electricity Authority.
The contributions of technology research and development are recognized as an expense when incurred.

3.19 Revenue recognition
Sales of electricity energy are recognized on a monthly basis in accordance with a cyclical recording of
electricity usage units of the customers from electric meters.
Sales of electricity equipment are recognized when goods are delivered, and the ownership is transferred
to customers.
Income from constructions for electricity users is recognized based on proportion to actual costs incurred.
Deferred contributions for construction are recognized as income at the rate of 5% per annum (equal to
depreciation rate of Provincial Electricity Authority’s electricity distributing system assets).
Interest income is recognized as it accrues on a time proportion basis taking into account the principal
amount outstanding and the effective interest rate.

3.20 Executive remuneration
Executive remuneration represents the compensation paid to directors and management who have the
power to decide which includes both of monetary and remunerations beneft.

3.21 Financial costs
Financial costs represent costs incurred from seeking operational funds which include interest expense and fee paid.
Interest and other expenses, directly attributable to constructions of buildings and electricity generating
and distributing systems, are incurred from loans made specifcally for purpose of acquiring fxed assets are
capitalized as costs of assets, and interest expense incurred from loans made on general purpose are capitalized
as a part of the costs of the assets at the capitalization rate.

Interest and other expenses incurred subsequent to the completion of construction are recognized as
expenses for the period in the statements of comprehensive income.

SMART PEA 105
Annual Report 2016 Provincial Electricity Authority