In contracts for factory facilities, an operation service is sometimes included. Therefore, the contract can be divided into two performance obligations: construction obligation and operation obligation. However, factory facilities are usually highly complex, and it is almost impossible to find a new contractor solely for the operation service. For this reason, the author believes that these two obligations may need to be combined rather than separated. Professional advice on this matter is sought.

According to IFRS 15 - Revenue from Contracts with Customers, an entity should identify each promised good or service at contract inception and treat it as a performance obligation, provided that the good or service is distinct. When assessing distinctness, it is necessary to consider whether the customer can benefit from the good or service on its own, and whether the good or service is highly interrelated or interdependent with other promised goods or services in the contract.

In the context of factory construction and operation, construction activities and operation services are usually significantly interrelated: the performance of operation services depends on the facility after construction is completed, and the technical characteristics of the facility may require the operator to have specific expertise. If the customer cannot benefit from the construction service alone or the operation service alone (for example, independent operation is not feasible), these two services may not meet the condition of being 'distinct' and should therefore be combined into one performance obligation.

In addition, IFRS 15 also requires an assessment of significant integration services in the contract. If construction and operation services are integrated into a combined output (i.e., an 'operable factory'), this may constitute a single performance obligation. In practice, if the contract terms indicate that the contractor is responsible for the ongoing operation of the entire factory, and the operation service and construction service are inseparable in terms of risk and timing, combining them is more reasonable.

However, whether to combine should be determined based on specific facts and contract terms. For example, if the contract allows the customer to freely choose another operation service provider after construction is completed, or if the operation service can be priced and evaluated independently of the construction service, separation may still be necessary. Therefore, it is recommended to conduct a detailed analysis based on the specific terms of the contract, industry practice, and the guidance of IFRS 15.

In summary, in cases where factory facilities are highly complex and it is difficult to find a separate operation contractor, combining the construction and operation obligations into one performance obligation is practically reasonable. However, the final determination should be based on the facts of the contract and the requirements of IFRS 15, and professional accounting advisors may be consulted when necessary.