Adrian Johnson
TLDR:
Key points:
- Irish hotel group Dalata to change accounting treatment of residential deal
- Accounting regulator IAASA found the sale of lands at former Tara Towers Hotel not part of ordinary activities
Hotel group Dalata agrees to change accounting treatment of residential deal following decision by regulator
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, IAASA. The regulator looked at Dalata’s accounting treatment of the proceeds from the sale of residential units as revenue in the financial statements for the year ending December 2022. The units were developed on surplus land of the former Tara Towers Hotel in South Dublin through a forward sale with a third party. IAASA concluded that the sale of residential units was not part of the ordinary activities of a hotel group like Dalata and did not meet the definition of revenue under IFRS 15. As a result, Dalata will now present this income separately in its financial statements.
Dalata provided voluntary undertakings to reflect this finding in future financial statements and revise the presentation of its income statement to disclose “income from residential development activities” separately from revenue. The company stated that while this was its first such transaction, it had no immediate plans for another one, but reserved the right to do so if it made commercial sense. In response to IAASA’s decision, Dalata expressed satisfaction with the transparency in its accounts and agreed to tweak the presentation of income accordingly.
Overall, this decision by IAASA highlights the importance of appropriate accounting treatment in financial statements, especially in unique transactions that may not fall under the ordinary activities of a company.
