Solution

The revenue recognition for Minitek Limited will follow the guidelines set forth in the IFRS 15 standard. Under this standard, an entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when (or as) the customer obtains control of that good or service.

For Minitek Limited, its performance obligation is to provide monthly payroll processing services. These services are performed over time, not at a single point, thus they are considered a "series of distinct services" that are substantially the same and have the same pattern of transfer.

Therefore, Minitek Limited should recognize the revenue over time, as the services are provided to ABC Limited. This would likely involve a straight-line method of recognizing revenue over the course of a year unless there are reasons why the costs or benefits to the customer are not evenly distributed across this period.

For example, if Minitek is being paid a flat annual fee by ABC Limited, it would recognize 1/12 of this fee as revenue each month, assuming services are provided evenly throughout the year. If there are any up-front fees, these would also be spread out over the contract term, unless they are explicitly for services performed at the start of the contract.

This method reflects the transfer of control to the customer, which is happening continuously as Minitek provides the payroll processing services.