CERTYNEX IFRS ACADEMY

Quercy Agri sells fertiliser to cooperatives at a contractual price of 80,000 per delivery. The contract provides for no reduction. For several years, however, Quercy Agri has accepted, when the harvest is poor, a payment lower than the agreed price, and this practice is known to its customers. How should the promised consideration be characterised?

The consideration is fixed at 80,000, since the contract contains no reduction clause.

It is variable: the known practice creates an expectation of a price concession.

The consideration becomes variable only when Quercy Agri actually grants a reduction to a cooperative.

The consideration is fixed; the practice relates only to the cooperatives' credit risk.