Revenue – ifrs 15 handbook

5.7 
Bill-and-hold arrangements
IFRS 15.B79
Bill-and-hold arrangements occur when an entity bills a customer for a product 
that it transfers at a point in time, but retains physical possession of the product 
until it is transferred to the customer at a future point in time. This might occur 
to accommodate a customer’s lack of available space for the product or delays in 
production schedules.
IFRS 15.B80–B81
To determine when to recognise revenue, an entity needs to determine when 
the customer obtains control of the product. Generally, this occurs at shipment or 
delivery to the customer, depending on the contract terms (for discussion of the 
indicators for transfer of control at a point in time, see 
Section 5.4
). The standard 
provides criteria that have to be met for a customer to obtain control of a product in 
a bill-and-hold arrangement. These are illustrated below.
Yes
Yes
Yes
No
The customer has not
obtained control. The
entity may not
recognise revenue
until it concludes that
the customer has
obtained control
of the product
The customer has
obtained control. The
entity recognises
revenue on a
bill-and-hold basis
Evaluating when a customer obtains control of a product in a
bill-and-hold arrangement that satisfies the criteria in Step 1
Is the reason for the bill-and-hold
arrangement substantive?
No
No
No
Yes
Has the product been
identified separately as belonging
to the customer?
Is the product ready for physical
transfer to the customer?
Does the entity have the ability
to use the product or direct it to
another customer?

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160 | Revenue – IFRS 15 handbook
IFRS 15.B82
If an entity concludes that it is appropriate to recognise revenue for a bill-and-
hold arrangement, then it is also providing a custodial service to the customer, 
which may constitute a separate performance obligation to which a portion of the 
transaction price is allocated.