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V Ltd. grants a customer a three-year anti-virus software licence and promises when-and-if-available updates that are CRITICAL to the continued use of the software. Under Ind AS 115, V Ltd. has:
AThree performance obligations including an implicit obligation to provide technical support
BNo performance obligation until the first update is actually delivered
CTwo performance obligations because the licence and the updates are each capable of being distinct
DA single performance obligation — the licence and the updates are inputs into a combined item (continuous anti-virus protection)
Answer & Solution
Correct answer: D. A single performance obligation — the licence and the updates are inputs into a combined item (continuous anti-virus protection)
Each is capable of being distinct (software works without each particular update). But they are NOT separately identifiable in the context of the contract — the nature of V's promise is CONTINUOUS protection, and the updates are integral to that combined output. Therefore a SINGLE PO.
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