292 WASCO BERHAD SECTION 6 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 26 GROSS REVENUE (CONTINUED) (a) Revenue from contracts with customer (i) Contract revenue Contract revenue with customers include contracts relating to pipe coating and manufacturing of boilers as well as engineering and fabrication services. These contracts may include multiple performance obligations as they are not highly integrated. Hence, the transaction price will be allocated to each performance obligation based on the standalone selling price. Where the contracts are highly integrated, they are recognised as a single performance obligation. Revenue is recognised progressively based on the progress towards complete satisfaction of the performance obligation. Revenue are recognised over time when control of the asset is transferred over time when the Group’s performance: • creates and enhances an asset that the customer controls as the services are being performed; or • does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. The progress towards complete satisfaction of the performance obligation is measured based on one of the following methods that best reflect the Group’s performance in satisfying the performance obligation: • direct measurements of the value transferred by the Group to the customer (eg. surveys of performance completed to date); or • the Group’s efforts or inputs to the satisfaction of the performance obligation (eg. by reference to cost incurred up to the end of the reporting period as a percentage of total estimated costs for complete satisfaction of the contract). Revenue is recognised over the period of the contract by reference to the progress, based on the extent of contract costs incurred. Significant judgement is required in the estimation of the progress towards complete satisfaction of a performance obligation based on the extent of contract costs incurred over the estimated budget cost and the recoverability of the construction contracts. The estimated contract costs to completion is based on estimated and approved budgets, which require assessment and judgements to be made on changes in, for example, work scope, costs and costs to completion. In making these judgements, management relies on past experience.
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