CERTYNEX IFRS ACADEMY

Merkan SA carries out in September the annual scheduled maintenance of its production lines, for EUR 240,000 (case data). Case assumptions: the maintenance is performed and invoiced in the third quarter; before it is performed, Merkan SA has no obligation to carry it out, and the cost does not meet the definition of an asset at the annual closing. Management proposes to recognise EUR 60,000 per quarter "to smooth the quarters". What must Merkan SA do?

Recognise EUR 60,000 as an expense each quarter, with a cumulative provision of EUR 180,000 at the end of the third quarter before the maintenance is performed.

Recognise EUR 240,000 as an expense in the third quarter, when the cost is incurred, without spreading it in quarters over the year.

Carry EUR 240,000 as an asset until the end of the year, then charge it to expense in one go at the annual closing of the year.

Recognise EUR 120,000 as an expense in the third quarter and defer the balance to the fourth quarter to balance the last two quarters.