CERTYNEX IFRS ACADEMY

Nuage Clair enters into a 3-year IT hosting contract and charges non-refundable upfront fees of EUR 30,000, intended, among other things, to cover its set-up costs of EUR 18,000 (migrating the data onto its own servers). Its analysis, not challenged here, concludes that these set-up activities transfer no service to the customer and satisfy no performance obligation. The hosting service is satisfied over time, and progress is measured on the basis of costs incurred (input method, a choice of the case). Which treatment is appropriate?

Include the EUR 18,000 of set-up costs in the measure of progress, which allows a significant part of the revenue to be recognised upon migration.

Recognise the EUR 30,000 of upfront fees as revenue as soon as they are invoiced, since they are non-refundable.

Treat the migration as a separate performance obligation satisfied at a point in time and allocate the EUR 30,000 to it.

Exclude the set-up from the measure of progress and assess whether its costs are costs to fulfil the contract to be capitalised; the fees are recognised as revenue as the hosting is provided.