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Under Ind AS 115, INCREMENTAL costs of obtaining a contract that the entity EXPECTS TO RECOVER should be:
ADeferred and amortised straight-line over the financial year
BExpensed immediately, regardless of recovery expectation
CTreated as a contract liability
DCapitalised as an asset
Answer & Solution
Correct answer: D. Capitalised as an asset
Para 91-92 — incremental costs of obtaining a contract (e.g., sales commissions paid only on signing) are capitalised when the entity expects to recover them. Non-incremental costs (legal fees, salesperson salaries earned regardless of win/loss) are expensed. A practical expedient lets entities expense costs if amortisation period would be ≤ 1 year.
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