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Under Ind AS 115, the practical expedient allowing incremental contract-acquisition costs to be expensed as incurred applies when:
AThe amortisation period of the asset the entity would have otherwise recognised is one year or less
BThe commission is paid to an external party rather than an employee
CThe contract value is below the entity's audit materiality threshold
DThe entity's normal accounting policy is to expense all sales costs
Answer & Solution
Correct answer: A. The amortisation period of the asset the entity would have otherwise recognised is one year or less
Para 94 — the one-year practical expedient. Entities may expense incremental costs if the amortisation period would be ≤ 12 months. This is a policy choice applied consistently. It avoids the administrative burden of capitalising and amortising very small contract assets.
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