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Under Ind AS 115, an "assurance-type" warranty (one that promises the product will function as agreed) is accounted for as:
ABoth a performance obligation and a cost provision simultaneously
BA separate performance obligation under Ind AS 115, with revenue allocated to it
COutside the scope of all Ind AS until claims are actually made
DA cost provision under Ind AS 37 — not a separate performance obligation
Answer & Solution
Correct answer: D. A cost provision under Ind AS 37 — not a separate performance obligation
Para B28-B31 distinguish assurance-type (mere quality guarantee) warranties — accounted for as a cost provision under Ind AS 37 — from service-type warranties, which are separate performance obligations. The assurance warranty is not allocated revenue; only the service-type warranty is.
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