When does Petro Stopping Center recognize revenue from contracts with customers?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue from contracts with customers is recognized when or as the Company satisfies a performance obligation by transferring control of a promised good or service to a customer. The transfer of control of oil, natural gas, natural gas liquids, LNG, petroleum and chemical products, and other items usually coincides with title passing to the customer and the customer taking physical possession. The Company principally satisfies its performance obligations at a point in time; the amounts of revenue recognized relating to performance obligations satisfied over time are not significant.
When, or as, a performance obligation is satisfied, the group recognizes as revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Company expects to be entitled. The transaction price is allocated to the performance obligations in the contract based on standalone selling prices of the goods or services promised.
Contracts for the sale of commodities are typically priced by reference to quoted prices. Revenue from term commodity contracts is recognized based on the contractual pricing provisions for each delivery. Certain of these contracts have pricing terms based on prices at a point in time after delivery has been made. Revenue from such contracts is initially recognized based on relevant prices at the time of delivery and subsequently adjusted as appropriate. All revenue from these contracts, both that recognized at the time of delivery and that from post-delivery price adjustments, is disclosed as revenue from contracts with customers.
Sales and purchase of commodities accounted for under IFRS 15 are presented on a gross basis in Revenue from contracts with customers and Purchases respectively. Physically settled derivatives which represent trading or optimization activities are presented net alongside financially settled derivative contracts in Other operating revenues within Sales and other operating income. Certain physically settled sale and purchase derivative contracts which are not part of trading and optimization activities are presented gross within Other operating revenues and Purchases respectively. Changes in the fair value of derivative assets and liabilities prior to physical delivery are also classified as other operating revenues.
Physical exchanges with counterparties in the same line of business in order to facilitate sales to customers are reported net, as are sales and purchases made with a common counterparty, as part of an arrangement similar to a physical exchange.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, revenue from contracts with customers is recognized when the company satisfies a performance obligation by transferring control of a promised good or service to a customer. For oil, natural gas, natural gas liquids, LNG, petroleum, chemical products, and other items, this transfer of control usually happens when the title passes to the customer and the customer takes physical possession of the goods. Petro Stopping Center primarily satisfies its performance obligations at a specific point in time, with revenues recognized over time being insignificant.
When a performance obligation is satisfied, Petro Stopping Center recognizes as revenue the portion of the transaction price allocated to that obligation. The transaction price is the amount the company expects to be entitled to, and it is allocated to performance obligations based on the standalone selling prices of the promised goods or services.
For commodity sales, prices are typically based on quoted prices. Revenue from term commodity contracts is recognized based on the contractual pricing provisions for each delivery. Some contracts have pricing terms based on prices at a point in time after delivery. In these cases, revenue is initially recognized based on relevant prices at the time of delivery and then adjusted as needed. All revenue from these contracts, including that recognized at delivery and from post-delivery price adjustments, is reported as revenue from contracts with customers.
Sales and purchases of commodities accounted for under IFRS 15 are presented on a gross basis in Revenue from contracts with customers and Purchases respectively. Physically settled derivatives which represent trading or optimization activities are presented net alongside financially settled derivative contracts in Other operating revenues within Sales and other operating income. Certain physically settled sale and purchase derivative contracts which are not part of trading and optimization activities are presented gross within Other operating revenues and Purchases respectively. Changes in the fair value of derivative assets and liabilities prior to physical delivery are also classified as other operating revenues. Physical exchanges with counterparties in the same line of business in order to facilitate sales to customers are reported net, as are sales and purchases made with a common counterparty, as part of an arrangement similar to a physical exchange.