PEI Cannabis 2023 Annual Report

PRINCE EDWARD ISLAND CANNABIS MANAGEMENT CORPORATION Notes to Financial Statements Year Ended March 31, 2023

4. SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition Revenue is derived from the sale of goods and other income from the rendering of services. Revenue is measured by reference to the fair value of the consideration received or receivable by the Corporation for goods or services supplied, exclusive of sales tax. Revenue from the sale of goods is recognized when the amount of revenue can be reliably measured, collection is probable, the costs incurred or to be incurred can be reliably measured, and when significant risks and rewards of ownership have been transferred to the buyer. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken legal title and possession of the goods. Other income includes interest on bank deposits and in-store marketing fees. Revenues from interest on bank deposits are recognized when they can be reliably measured. Revenues from marketing fees are recognized when the amount of the revenues can be reliably measured and it is probable the economic benefits will flow to the Corporation. The Corporation sells gift cards to its customers and initially records the amount to deferred revenue. Revenue is recognized as the gift cards are redeemed. If, in the opinion of management, the likelihood of the gift card being redeemed is remote, then the revenue will be recognized at that time. Expenses Expenses are recorded on an accrual basis in the period in which the transaction or event that gave rise to the expense occurred. Significant accounting judgments and estimates The preparation of financial statements in accordance with IFRS requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, income, and expenses. The actual results may materially differ from management's estimation. Items requiring the use of significant estimates include useful lives of property and equipment, inventory values, accrued liabilities, legal contingencies and impairment. The estimates and underlying assumptions are reviewed on an ongoing basis based on historical experience, best knowledge of current events and conditions and other factors that are believed to be reasonable under the circumstances, including expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results, and actual results may ultimately differ from these estimates. Revisions to accounting estimates are recorded in the period in which the estimate is reversed if the revision affects only that period or in the period of revision and in future periods if the revision affects

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both the current and future periods. Future accounting developments

A number of new standards and amendments to standards and interpretations are not yet effective for the year ended March 31, 2023 and have not been adopted by the Corporation in preparing these financial statements. These changes are not expected to have a material impact on the Corporation's financial statements.

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PEICMC 2022-2023 Annual Report

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