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Indicators that control of an asset has been transferred to the customer under Ind AS 115 include all of the following EXCEPT:
AThe customer has the significant risks and rewards of ownership of the asset
BThe customer has legal title to the asset
CThe entity has recognised a contract liability for the asset on its books
DThe entity has a present right to payment for the asset
Answer & Solution
Correct answer: C. The entity has recognised a contract liability for the asset on its books
Para 38 lists five INDICATORS of control transfer: (a) present right to payment, (b) legal title with the customer, (c) physical possession transferred, (d) customer has significant risks/rewards, (e) customer has accepted the asset. A contract liability is a RESULT of the entity's own accounting (collected in advance of performance), not an indicator of control transfer. None of these indicators is individually determinative — the entity applies judgement.
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