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Prepaid insurance is NOT a financial asset because:
AThe future economic benefit is the receipt of services, not cash or another financial asset
BIt is denominated in a non-functional currency
CInsurance contracts are scoped out of Ind AS 109
DIt is not measurable at fair value through profit or loss
Answer & Solution
Correct answer: A. The future economic benefit is the receipt of services, not cash or another financial asset
A financial asset must give a contractual right to receive cash or another financial asset. Prepayments entitle the holder to future goods or services, not cash, so they fall outside the financial-instrument definition. Measurement options and currency considerations are irrelevant to the scope question.
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