Principal Issues: (1) Is revenue of an eligible entity determined under the percentage of completion method considered qualifying revenue under subsection 125.7(1)? (2) Are unrealized gains/losses of investments arising from mark-to-market adjustments to the carrying amount of the investments under accounting practices included in qualifying revenue?
Position: (1) Likely yes. (2) Unrealized gains/losses arising from mark-to-market valuation adjustment to investments are not included in qualifying revenue.
Reasons: (1) The services performed under a contract generally give rise to an inflow of cash, receivables or other consideration in the qualifying period. (2) Unrealized gains/losses arising from mark-to-market valuation adjustment to investments do not give rise to an inflow of cash, receivables or other consideration.
