Home › CA Final › financialreporting › measureprogress › Under Ind AS 115, a STAND-READY OBLIGATION (the …
Under Ind AS 115, a STAND-READY OBLIGATION (the entity stands ready to provide services as and when the customer requests):
AAlways uses a cost-to-cost input method based on the entity's standby effort
BAlways uses an output method tied to units consumed by the customer
CIs typically measured using a TIME-BASED method if the customer is expected to consume the benefits equally throughout the contract period
DCannot be recognised over time — stand-ready obligations are point-in-time satisfaction
Answer & Solution
Correct answer: C. Is typically measured using a TIME-BASED method if the customer is expected to consume the benefits equally throughout the contract period
When the entity's promise is to stand ready (e.g., 24×7 helpdesk, unlimited gym access), and the customer is expected to consume benefits evenly through the period, a TIME-BASED (often straight-line) measure of progress is appropriate. If benefit is uneven (e.g., seasonal, predictable spikes), straight-line is not appropriate.
Related questions
An entity manufactures a customised satellite for a government agency. The asset has practA consumer-goods manufacturer pays a retailer ₹1 cr in SLOTTING FEES to secure prominent sAFS provides audit services to WBC with a 15% margin (matching AFS's typical margin). If WAn entity has cost-to-cost input method on a long-term construction contract. During the yA bill-and-hold arrangement under Ind AS 115 allows revenue recognition with goods still iAn entity sells a tangible asset on 1 January for ₹10 lakh with a customer PUT OPTION at ₹Pogo grants Toy Manufacturer a 3-year licence to use the "Chhota Bheem" character on toys.Under Ind AS 115, a licence of INTELLECTUAL PROPERTY is treated as a "RIGHT TO ACCESS" (re