Builder Corp. is constructing a warehouse that is expected to take two years to complete. Builder prepares financial statements in accordance with IFRS. Explain how Builder should recognize revenue under the earnings approach, in each of the following scenarios:
(a) Builder signs a contract upfront to construct the warehouse for a specific buyer. Legal tide rests with the buyer as the warehouse is being built. The buyer has control over the construction and can require major structural changes during construction.
(b) No contract is signed upfront. Builder normally constructs building structures for sale upon completion.