Prime Sleeves Limited is a large, listed company that manufactures and supplies customers with printed and laminated barrier-grade flexible plastic sleeves. They have grown considerably over the past 5 years, with branches and warehouse facilities all over South Africa.

Prime Sleeves Limited signed a contract with Positive Pests (Pty) Ltd on 30 June 2021 to fumigate their numerous warehouses. The contract stipulated a contract price of R80 000 on completion of the contract. The total cost of the contract to Positive Pests (Pty) Ltd was R60 000.

At 1 January 2022, Positive Pests (Pty) Ltd completed 25% of the fumigation (based on costs incurred to date to total expected costs).

On 30 September 2022, the remainder of the contract was completed by Positive Pests (Pty) Ltd. After inspection of the completed fumigation, Prime Sleeves Limited issued a cheque on 8 October 2022 for the work completed. The fumigation expense has been recorded in the accounting records of Prime Sleeves Limited according to the requirements of International Financial Reporting Standards. 

Required:

With reference to the Conceptual Framework, motivate with reasons whether the fumigation of the warehouses should be recognised as an expense in the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2022.