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An entity sells Product A for ₹1,000 with a 40% discount voucher usable on additional purchases within 30 days (cap ₹1,000 per use). A 10% seasonal discount is available to ALL customers in the same window (the 10% and 40% cannot be combined). Likelihood of voucher use is 80%; average additional purchase is ₹500. The standalone selling price of the discount voucher (the material right) under Ind AS 115 is:
A₹120 — applying the INCREMENTAL 30% (40% − 10%) × ₹500 × 80%
B₹500 — full average purchase value of the additional products
C₹160 — applying the full 40% × ₹500 × 80%
D₹400 — applying 40% × ₹1,000 (the original Product A price)
Answer & Solution
Correct answer: A. ₹120 — applying the INCREMENTAL 30% (40% − 10%) × ₹500 × 80%
Only the INCREMENTAL discount over what other customers receive constitutes a material right. The 10% seasonal discount is available to all, so only the 30% incremental discount is the material right. SSP = ₹500 (avg purchase) × 30% (incremental discount) × 80% (exercise likelihood) = ₹120. Allocating the ₹1,000 transaction price by SSP gives Product A ≈ ₹890, voucher ≈ ₹110.
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