Annual Report 2010 - Enel.com

For more information on the estimation criteria adopted
in determining provisions for dismantling and/or restoration
of property, plant and equipment, especially those associated
with nuclear power plants, please see the section
on the use of estimates.
Grants
Grants are recognized at fair value when it is reasonably
certain that they will be received or that the conditions
for receipt have been met as provided for by the governments,
government agencies and similar local, national or
international authorities.
Grants received for specific expenditure or specific assets
the value of which is recognized as an item of property,
plant and equipment or an intangible asset are recognized
as other liabilities and credited to the income statement
over the period in which the related costs are recognized.
Operating grants are recognized fully in profit or loss at
the time they satisfy the requirements for recognition.
Revenues
Revenues are recognized using the following criteria depending
on the type of transaction:
> revenues from the sale of goods are recognized when
the significant risks and rewards of ownership are
transferred to the buyer and their amount can be reliably
determined;
> revenues from the sale and transport of electricity and
gas refer to the quantities provided during the period,
even if these have not yet been invoiced, and are determined
using estimates as well as the fixed meter reading
figures. Where applicable, this revenue is based on
the rates and related restrictions established by law
or the Authority for Electricity and Gas and analogous
foreign authorities during the applicable period. In particular,
the authorities that regulate the electricity and
gas markets can use mechanisms to reduce the impact
of the temporal mismatching between the setting of
prices for energy for the regulated market as applied
to distributors and the setting of prices by the latter for
final consumers;
> revenues from the rendering of services are recognized
in line with the stage of completion of the services.
Where it is not possible to reliably determine the value
of the revenues, they are recognized in the amount of
the costs that it is considered will be recovered;
164 Enel Annual Report 2010 Consolidated financial statements
> revenues accrued in the period in respect of construction
contracts are recognized on the basis of the payments
agreed in relation to the stage of completion of
the work, determined using the cost-to-cost method,
under which costs, revenues and the related margins
are recognized on the basis of the progress of the project.
The stage of completion is determined as a ratio
between costs incurred at the measurement date and
the overall costs expected for the project. In additional
to contractual payments, project revenues include any
payments in respect of variations, price revisions and
incentives, with the latter recognized where it is probable
that they will actually be earned and can be reliably
determined. Revenues are also adjusted for any
penalties for delays attributable to the entity;
> revenues for fees for connection to the electricity distribution
grid are recognized in full upon completion
of connection activities if the service provided can be
recognized separately from any electricity distribution
services provided on an ongoing basis.
Financial income and expense
Financial income and expense is recognized on an accruals
basis in line with interest accrued on the net carrying
amount of the related financial assets and liabilities
using the effective interest rate method. They include
the changes in the fair value of financial instruments recognized
at fair value through profit or loss and changes
in the fair value of derivatives connected with financial
transactions.
Income taxes
Current income taxes for the period are determined using
an estimate of taxable income and in conformity with the
applicable regulations.
Deferred tax liabilities and assets are calculated on the
temporary differences between the carrying amounts of
assets and liabilities in the consolidated financial statements
and their corresponding values recognized for tax
purposes on the basis of tax rates in effect on the date the
temporary difference will reverse, which is determined on
the basis of tax rates that are in force or substantively in
force at the balance sheet date.
Deferred tax assets are recognized when recovery is probable,
i.e. when an entity expects to have sufficient future
taxable income to recover the asset.