Dalata, an Irish hotel conglomerate, has decided to modify its accounting processes for the selling of its residential units in line with a ruling from the accounting regulator Iaasa. The decision was regarding a transaction undertaken in 2022.
Iaasa, after examining the hotel group’s management of proceeds accrued from the sale of residential units as income in Dalata’s fiscal declarations for the year closing December 2022, noticed the units were constructed on extra land from the erstwhile Tara Towers Hotel in South Dublin.
The arrangement entailed an advance selling agreement to a third party, resulting in the land no longer fulfilling the criteria of property, plant, and equipment as per the IAS 16 definition. In the absence of a specific accounting standard for such a transaction, Dalata used IFRS 15, defining revenue as the proceeds generated during an entity’s regular operations.
Iaasa ruled that the sale of residential units did not fall under Dalata’s usual activities and also failed to fit the definition of revenue under IFRS 15. It subsequently called for a distinct display within the consolidated profit or loss statement and other comprehensive income.
Voluntarily, Dalata assured Iaasa that future financial reports would demonstrate this discovery, and a revision of its income statement would occur, also for the 2022 reporting period. This would display “income from residential development activities” and related costs separately from “revenue and cost of sales.”
Dalata informed Iaasa that this was its first such transaction, with no immediate pursuits for another one yet retaining the rights for more if commercially viable.
Exclaiming their satisfaction with the recognition by Iaasa for their account transparency, Dalata confirmed that they were open to revising their reports following the presented recommendation.