Solution

Under IFRS 15, for a contract to be valid, it is required that it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In this scenario, if New Way Limited expects that it may not be able to collect the full amount from the customer, it needs to assess whether the criteria for a contract under IFRS 15 are met.

1. Assessment of the contract: If New Way determines that it is not probable that they will collect the consideration they are entitled to, then, under IFRS 15, the contract does not exist (yet). Consequently, New Way would not recognize the $1,250,000 as contract revenue at this stage. Instead, it should continue to reassess the contract going forward to determine if the criteria become met at a later date.
2. Subsequent recognition: If at a future date, the economic conditions improve and New Way reevaluates and determines that it is probable that they will collect the consideration to which they are entitled, then they would account for the contract from that date forward.
3. Cash received: If New Way receives any partial payments from the customer before it is probable that they will collect the consideration they are entitled to, they would not recognize this as revenue but instead as a liability (deferred revenue or contract liability). Once they determine that collection is probable, they can begin to recognize this deferred revenue as actual revenue as they perform under the contract.

The above explanation serves as a general guideline. The actual recognition would depend on the specifics of the contractual terms and conditions, and the economic conditions of the market where New Way is operating.