The FASB has defined criteria for bill and hold revenue recognition under FASB Accounting Standards Update (ASU) 2014-09 and set criteria the entity must meet to qualify for revenue recognition:

FASB ASC 606-10-55-83: For a customer to have obtained control of a product in a bill-and-hold arrangement, all of the following criteria must be met:

a. The reason for the bill-and-hold arrangement must be substantive (for example, the customer has requested the arrangement).

b. The product must be identified separately as belonging to the customer.

c. The product currently must be ready for physical transfer to the customer.

d. The entity cannot have the ability to use the product or to direct it to another customer.

Your client is an industrial products company that sells drilling pipes for other industrial companies. The Clover Drill Company (Clover) is a customer of your client and orders drilling pipes from your client. Clover requests the arrangement be on a bill-and-hold basis because of the frequent changes to the timeline for developing remote gas fields and the long lead times needed for delivery of the drilling equipment and supplies. Your client has a history of bill-and-hold transactions with Clover, using previous revenue recognition policies established by the Securities and Exchange Commission (SEC), and had established standard terms for such arrangements based on the SEC guidelines.

The pipe is separately warehoused for Clover and is complete and ready for shipment. Your client cannot utilize the pipe or direct the pipe to another customer once the pipe is in the warehouse. The terms of the arrangement require Clover to remit payment within 30 days of the pipe being placed into your clients warehouse. Clover will request and take delivery of the pipe when it is needed.

Your client believes the arrangement with Clover meets the four criteria is ASC 606-10-55-83.

Required: Based on the clients description above, evaluate criteria (a) through (d) in ASC 606-10-55-83 to determine if the bill and hold criteria for revenue recognition have been met. What types of audit documentation can the client provide to support Clovers arrangement with the client?