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Under Ind AS 109's recognition guidance, a FIRM COMMITMENT to purchase or sell goods or services is recognised:
AWhen the underlying market price changes by more than 10%
BPro-rata over the period from commitment date to expected settlement
COnly when AT LEAST ONE party has performed under the agreement (e.g., goods shipped or services rendered)
DOn the date the commitment is signed by both parties
Answer & Solution
Correct answer: C. Only when AT LEAST ONE party has performed under the agreement (e.g., goods shipped or services rendered)
Para B3.1.2 — a firm commitment for non-financial items doesn't trigger recognition just by being signed; the entity becomes a party to a contract but no financial asset/liability yet exists. Recognition triggers when at least one side has performed (delivered/rendered). Exception: if the commitment is DESIGNATED at fair value through profit or loss (e.g., hedge accounting), the NET fair value is recognised on the commitment date.
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