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An entity sells gym memberships at ₹7,500 per year and offers a discounted renewal at ₹6,000 in years 2-3. The same ₹6,000 price is offered as the standalone rate to anyone (including non-members) in the same period. Under Ind AS 115, the renewal option:
AIs variable consideration that must be estimated and constrained
BIs a separate performance obligation because the renewal price is lower than the initial price
CIs a marketing offer, not a separate performance obligation, because it does not give the customer a material right
DIs a contract liability for the discounted amount until exercised
Answer & Solution
Correct answer: C. Is a marketing offer, not a separate performance obligation, because it does not give the customer a material right
Para B40-B43 — a customer option is a separate PO only if it gives the customer a MATERIAL RIGHT (a discount that the customer would not get without entering the original contract). If the discounted price reflects the standalone selling price available to anyone, it is a marketing offer. The renewal is treated as a new contract only if and when exercised.
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