Irish hotel group Dalata has agreed to change the way it accounts for the sale of residential units in its financial statements, following a finding by the accounting regulator relating to a transaction in 2022.
The Irish Auditing and Accounting Supervisory Authority (IAASA) looked at the hotel group’s accounting treatment of the proceeds from the sale of residential units as revenue in Dalata’s financial statements for the year to the end of December 2022. The units had been developed on surplus land of the former Tara Towers Hotel in South Dublin.
This involved a forward sale with a third party and meant the land ceased to meet the definition of property plant and equipment, under IAS 16. As there is no specific accounting standard covering such a transaction, Dalata applied IFRS 15, which defines revenue as “income arising in the course of an entity’s ordinary activities”.
IAASA concluded that the sale of residential units was not part of the ordinary activities of a hotel group such as Dalata and did not meet the definition of revenue under IFRS 15. Therefore, it required a separate presentation within the consolidated statement of profit or loss and other comprehensive income.
IAASA said Dalata had provided voluntarily undertakings that future financial statements would reflect this finding and that it would revise the presentation of its income statement, including for the 2022 reporting period, to disclose “income from residential development activities” and the cost of such development separately from “revenue and cost of sales”.
Dalata had told IAASA that this was the first such transaction undertaken by the company and it had no immediate plans to do another one, although it reserved the right to do so if it made commercial sense.
In a statement provided to The Irish Times about IAASA’s decision, Dalata said: “We are really pleased that IAASA recognised the transparency in our accounts, and we were happy to take the recommendation to tweak the presentation of this income as part of the feedback that we received.”
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