Customer acceptance

Learning objectives

• Determine whether a customer acceptance clause prevents the transfer of control, depending on whether compliance with the agreed specifications can be objectively determined.L2, L3

Normative references

• IFRS 15In accordance with paragraph 38(e), a customer's acceptance of an asset may indicate that it has obtained control of the asset. Customer acceptance clauses allow the customer to cancel the contract or require the entity to take remedial action if the good or service does not meet agreed-upon specifications; the entity takes them into account in determining when control transfers.
• IFRS 15 §B84If the entity can objectively determine that control has been transferred in accordance with the agreed-upon specifications, customer acceptance is a formality that does not affect the determination of when control transfers (for example, for size and weight criteria that can be verified before shipment).
• IFRS 15 §B85If the entity cannot objectively determine compliance with the specifications, it cannot conclude that control has transferred until it receives the customer's acceptance.
• IFRS 15 §B86When products are delivered for trial or evaluation purposes and the customer is not committed to pay until the trial period lapses, control transfers only upon acceptance by the customer or when the trial period lapses.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

7 questions

• Cartonnerie Maubert sells 20,000 boxes to a logistics company. The contract includes an acceptance clause covering only the dimensions and weight of the boxes. Maubert checks both criteria before shipment and documents compliance. The boxes are delivered on 15 June 20X1; the customer signs the acceptance report on 5 July 20X1. The other indicators (title, possession, right to payment) are present on delivery. When is control transferred?L2
• Optiméa delivers three laboratory analysers to a clinic on 1 October 20X1 for a 90-day trial period. The clinic only commits to pay at the end of the trial and can return the devices free of charge during that period. It uses them from delivery. The trial expires on 30 December 20X1; at that date, the clinic has neither expressly accepted nor returned the devices. When does Optiméa recognise revenue?L3
• At 30 September 20X1, Ventis is analysing several deliveries of equipment. Which of the following situations indicate that the customer (or the third party) has not yet obtained control of the delivered equipment?L3
• Ferronord sells steel beams whose agreed specifications (dimensions and weight) are measured and documented before each shipment. The contract includes a customer acceptance clause. True or false: customer acceptance is here a formality that does not affect the timing of the transfer of control of the beams.L2
• Médilab delivers three analysers to a laboratory for a 60-day trial. The laboratory only commits to pay at the end of the trial, if it decides to keep the devices. When is control of the analysers transferred to the laboratory?L2
• On 10 December 20X1, Robotec delivers a palletising robot designed for a customer. Contractual acceptance depends on reaching a rate of 600 pallets per hour under the actual conditions of the customer's plant, which cannot be replicated at Robotec before delivery. On-site tests are scheduled for January 20X2. When can Robotec conclude that control of the robot has transferred?L3
• The accounting department of Optilux, which sells standard light fittings and custom lighting installations, applies the following internal rule. True or false: as soon as a contract contains a customer acceptance clause, revenue can never be recognised before the acceptance certificate is signed.L3