CERTYNEX IFRS ACADEMY

The contract of Pradel allows the supplier to replace the specified compressor installed at its site. Pradel has no information on the supplier's fleet or replacement costs and cannot readily determine whether this substitution right is substantive. What should it conclude?

It presumes, out of prudence, that the substitution right is substantive.

It waits for the first actual substitution before concluding on whether there is an identified asset.

It presumes that the substitution right is not substantive.

It requires a certificate from the supplier, failing which the contract is treated as a service contract.