Consequently, the entity does not control the product. Instead, the entity
provides custodial services to the customer over the customer’s asset.
B81 In addition to applying the requirements in paragraph 38, for a customer to
have obtained control of a product in a bill-and-hold arrangement, all of the
following criteria must be met:
(a) the reason for the bill-and-hold arrangement must be substantive
(for example, the customer has requested the arrangement);
(b) the product must be identified separately as belonging to the customer;
(c) the product currently must be ready for physical transfer to the
customer; and
(d) the entity cannot have the ability to use the product or to direct it to
another customer.
B82 If an entity recognises revenue for the sale of a product on a bill-and-hold basis,
the entity shall consider whether it has remaining performance obligations
(for example, for custodial services) in accordance with paragraphs 22–30 to
which the entity shall allocate a portion of the transaction price in accordance
with paragraphs 73–86.
Customer acceptance
B83 In accordance with paragraph 38(e), a customer’s acceptance of an asset may
indicate that the customer has obtained control of the asset. Customer
acceptance clauses allow a customer to cancel a contract or require an entity to
take remedial action if a good or service does not meet agreed-upon
specifications. An entity shall consider such clauses when evaluating when a
customer obtains control of a good or service.
B84 If an entity can objectively determine that control of a good or service has been
transferred to the customer in accordance with the agreed-upon specifications
in the contract, then customer acceptance is a formality that would not affect
the entity’s determination of when the customer has obtained control of the
good or service. For example, if the customer acceptance clause is based on
meeting specified size and weight characteristics, an entity would be able to
determine whether those criteria have been met before receiving confirmation
of the customer’s acceptance. The entity’s experience with contracts for similar
goods or services may provide evidence that a good or service provided to the
customer is in accordance with the agreed-upon specifications in the contract. If
revenue is recognised before customer acceptance, the entity still must consider
whether there are any remaining performance obligations (for example,
installation of equipment) and evaluate whether to account for them separately.
B85 However, if an entity cannot objectively determine that the good or service
provided to the customer is in accordance with the agreed-upon specifications in
the contract, then the entity would not be able to conclude that the customer
has obtained control until the entity receives the customer’s acceptance. That is
because in that circumstance the entity cannot determine that the customer has
the ability to direct the use of, and obtain substantially all of the remaining
benefits from, the good or service.