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Step 1 of Ind AS 115 requires the entity to conclude that it is PROBABLE it will collect substantially all of the consideration to which it expects to be entitled. In this context, "probable" means:
AReasonably possible but not unlikely
BMore likely than not
CHighly likely beyond reasonable doubt
DPractically certain (above 95%)
Answer & Solution
Correct answer: B. More likely than not
Para 9(e) of Ind AS 115 uses "probable" with its standard threshold — "more likely than not" (greater than 50% likelihood). If collection is not probable, the contract fails Step 1 and Ind AS 115 is not applied to it until the collectability concern is resolved.
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