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A construction contractor builds a customised office building on the customer's land. Under Ind AS 115, this satisfies the performance obligation OVER TIME (criterion b) because:
AThe entity's performance creates or enhances an asset (work-in-progress) that the customer controls as the asset is created/enhanced
BThe contractor has no alternative use for the work-in-progress
CThe construction contract is long-duration and progress is measurable
DThe contractor has an enforceable right to payment for work done if cancelled
Answer & Solution
Correct answer: A. The entity's performance creates or enhances an asset (work-in-progress) that the customer controls as the asset is created/enhanced
Criterion (b) of para 35 — the customer's land hosts the work in progress; the customer obtains control of the WIP as it is constructed. This is the classic basis for over-time recognition in construction contracts on the customer's land. Criteria (a) and (c) are alternative paths that don't apply here.
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