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A bill-and-hold arrangement under Ind AS 115 allows revenue recognition with goods still in the entity's physical possession when ALL of the following are true. Which of these is NOT required?
AThe entity cannot have the ability to use the product or direct it to another customer
BStorage of the goods must be free of charge to the customer for at least 12 months
CThe reason for the bill-and-hold arrangement is SUBSTANTIVE (e.g., customer-requested)
DThe product is identified separately as belonging to the customer
Answer & Solution
Correct answer: B. Storage of the goods must be free of charge to the customer for at least 12 months
Para B81 — the four bill-and-hold criteria are: (a) substantive reason, (b) separate identification as belonging to customer, (c) product is ready for physical transfer, (d) entity has no ability to use it or redirect it. Free storage is NOT required — entities often charge custodial fees and treat them as an additional PO. The four criteria are about CONTROL transferring without physical possession transferring.
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