CERTYNEX IFRS ACADEMY

Métallis manufactures ten stainless steel tanks for Hydra. At the request of Hydra, whose construction site is delayed, the completed tanks are kept for six months in Métallis's warehouse, which provides custody. The tanks bear Hydra's name, are stored separately, ready for shipment, and Métallis can neither use them nor deliver them to another customer. The price invoiced covers the tanks and their custody. How does Métallis account for the contract when the tanks are completed?

It defers all revenue until the tanks are physically delivered to Hydra's site.

It immediately recognises the whole price invoiced as revenue.

It recognises revenue for the tanks and assesses whether custody is a separate performance obligation to which part of the price is allocated.

It recognises the whole price as revenue spread over the six months of custody, since the tanks have not left its warehouse.