Issue link: https://construction.trimble.com/en/resources/i/1520032
Page | 10 3. Does the customer control the property where work is being performed or own an asset that is being renovated or upgraded? 4. Do you have the right to payment during the contract for performance under the contract to date? 5. Does the legal title, physical possession, or risk/reward of ownership transfer to the customer during the performance of the contract? 6. Does the customer accept or take ownership of an asset as it is created? 7. Is the asset customized to the customer's specifi cations and if the contract were terminated before completion, would you be entitled to receive payment refl ecting a reasonable gross margin on the work that has already been performed? PERFORMANCE OBLIGATIONS SATISFIED AT A POINT IN TIME (ASC 606-10-25-30) If, based on the above guidance, control is not deemed to be transferred over time, the performance obligation is satisfi ed at a point in time. When this applies, the point in time of transfer is determined by one or more of the following: 1. Present right to payment exists. 2. Transfer of legal title to the asset. 3. Transfer of physical possession of the asset. 4. Transfer of signifi cant risks and rewards of ownership. 5. Customer acceptance of the asset. In application of the above factors, judgment will be required to determine the weight that each factor carries in the context of the contract. Revenue recognized at a point in time will often follow the current practice under the completed contract method. Certain elements of the construction industry frequently sell products, products and services, as well as normal contract commitments. For example, a heavy highway contractor may sell aggregates from its pits while also using aggregates to fulfi ll construction contracts. The aggregate sales would be properly classifi ed as a point in time sale. Likewise an HVAC contractor that has a service division might classify some or all of its service work as a point in time transaction. Whereas a time and material contract would likely be recognized over time. Identifying Contracts with Customers (continued) >