CERTYNEX IFRS ACADEMY

Hydrolis, which installs and maintains water fountains in offices, charges its customers non-refundable upfront fees when contracts are signed. Which of the following statements are correct?

Non-refundable upfront fees are always recognised as revenue on signature, because the entity will never have to give them back.

Hydrolis assesses whether the fee relates to the transfer of a promised good or service to the customer.

Any activity performed by Hydrolis at contract start is a performance obligation.

If the fee relates to a promised good or service, Hydrolis assesses whether it must be accounted for as a separate performance obligation in accordance with paragraphs 22 to 30.

When the fee is an advance payment for future services, the revenue recognition period may extend beyond the initial term if a renewal option provides a material right.