CERTYNEX IFRS ACADEMY

Fergane manufactures in its plant a machine designed for a single customer, with no alternative use to it. The contract gives it no right to payment if the customer terminates before delivery. It is accepted (case data) that the customer neither receives nor consumes any benefit during manufacture and does not control the machine while it is being built. What conclusion should be reached?

Recognition over time, since the machine has no alternative use to Fergane.

Obligation satisfied at a point in time: the third criterion also requires a right to payment.

Recognition over time, as manufacturing progresses each month in the plant.

Fergane may choose either method, as this is an accounting policy choice.