Under IFRS 15, revenue is recognized when control transfers to the customer. Which statement best reflects control transfer in construction projects?

• A. The customer has the ability to direct the use of the asset and obtain substantially all of its remaining benefits.
• B. Control transfers only when cash is collected.
• C. Control transfers at contract signing.
• D. Control transfers only when the asset is physically delivered.

Answer: (A)

Under IFRS 15, revenue is recognized when the customer gains control of the asset, not just when cash is received or when the asset is delivered. In construction projects, control transfers when the customer has the ability to direct how the asset is used and to obtain substantially all of the remaining benefits from that asset. This means revenue can be recognized for the portions of work that have already transferred control, even if the asset isn’t physically handed over yet, as long as the customer can direct its use and reap the remaining benefits.

This concept matters because it shifts focus from mere delivery or payment timing to who can direct use and benefit from the asset. Cash collection and contract signing are not definitive triggers for control, and physical delivery is not the sole indicator—control can pass earlier if the customer obtains those directing rights and benefits.