CERTYNEX IFRS ACADEMY

Pompéa mass-produces standard pumps. A contract assigns to a customer 50 pumps identified by their serial numbers, but Pompéa can deliver other identical pumps from its stock to that customer without breaching the contract or incurring significant additional costs. The contract provides a right to payment on termination. It is accepted (case data) that the first two criteria for recognition over time are not met. What do you conclude?

Recognition over time: assigning serial numbers prevents any redirection.

Recognition over time: the right to payment on termination is enough on its own.

The restriction is not substantive: the pumps have an alternative use, revenue is recognised at a point in time.

The analysis must focus on the contract margin, which alone determines alternative use.