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A payroll-processing company contracts to provide monthly payroll services for one year. Under Ind AS 115, this is recognised OVER TIME because:
AThe contract spans more than one accounting period
BPayroll software has no alternative use to the service provider
CThe customer simultaneously receives and consumes the benefits of payroll processing as it is performed each month
DCustomer would have an enforceable right to terminate at any time
Answer & Solution
Correct answer: C. The customer simultaneously receives and consumes the benefits of payroll processing as it is performed each month
This satisfies criterion (a) of para 35 — the customer immediately consumes the benefit of each month's payroll processing (it can't be "saved up"; if the service provider quit halfway, another provider wouldn't need to re-perform earlier months). Routine recurring services like payroll, cleaning, security, and data processing typically meet criterion (a). Contract duration, alternative use to the provider, and termination rights are NOT the basis.
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