Page | 27
EVALUATION OF WHEN CONTROL OF THE ASSET
PASSES TO THE CUSTOMER
A key element of correct accounting for uninstalled materials is the evaluation of when control of the
asset passes to the customer. For performance obligations for which control is not transferred over
time, control is transferred at a point in time. In many situations, the determination of when that point
in time occurs is relatively straightforward. However, in other circumstances, this determination is more
complex.
The contractor should consider the following when determining when control of a promised asset has
been transferred:
• The entity has a present right to payment for the asset.
• The customer has legal title to the asset.
• The entity has transferred physical possession of the asset.
• The customer has the signifi cant risks and rewards of ownership of the asset.
• The customer has accepted the asset.
The listing above is not to be considered a checklist and all of the above items do not need to be met
for the transfer of control of the assets. The contractor is required to consider all relevant facts and
circumstances to determine whether control has transferred.
Uninstalled Materials (continued)
>
