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Under Ind AS 115, costs to OBTAIN a contract are CAPITALISED only when:
AThey are incremental to obtaining the contract (would not have been incurred otherwise), and the entity expects to recover them
BThey are paid in cash within 30 days of contract signing
CThey exceed 5% of the contract's total transaction price
DThey relate to a specific employee on a long-term incentive plan
Answer & Solution
Correct answer: A. They are incremental to obtaining the contract (would not have been incurred otherwise), and the entity expects to recover them
Para 91-92 — capitalisation requires the costs to be INCREMENTAL (e.g., sales commissions paid only on contract win) AND the entity expects to recover them. Salesperson salaries and legal fees paid regardless of contract win/loss are NOT incremental and are expensed. A one-year practical expedient allows expensing if amortisation period would be ≤ 12 months.
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