Home › CA Final › financialreporting › presentationdisclosure › Under Ind AS 115, an impairment loss on a contra…
Under Ind AS 115, an impairment loss on a contract acquisition asset is recognised when:
AThe contract is in dispute or litigation
BThe customer's credit rating is downgraded below investment grade
CThe asset's carrying amount exceeds the remaining consideration the entity expects to receive less directly related costs yet to be recognised
DThree months have passed since the last invoicing date
Answer & Solution
Correct answer: C. The asset's carrying amount exceeds the remaining consideration the entity expects to receive less directly related costs yet to be recognised
Para 101 — impairment is triggered when carrying amount > remaining expected consideration less directly related contract costs yet to be recognised. In assessing remaining consideration, the entity IGNORES the constraint on variable consideration and adjusts for customer credit risk. Reversal is allowed if conditions improve, but not above the pre-impairment carrying amount net of amortisation.
Related questions
Under Appendix D of Ind AS 115, when an operator must MAINTAIN OR RESTORE infrastructure aA software company signs a 3-year contract for ₹1 cr; a 1% commission (₹1 lakh) is paid onUnder Ind AS 115's disclosures, the TRANSACTION PRICE ALLOCATED TO REMAINING PERFORMANCE OUnder Ind AS 115, an entity that has both an unconditional right to consideration (receivaUnder Appendix D of Ind AS 115, BORROWING COSTS attributable to a service-concession arranA Toll-Roads operator builds an expressway under a build-operate-transfer concession with Under Appendix D of Ind AS 115, an operator that gets the RIGHT TO CHARGE USERS of the pubUnder Appendix D of Ind AS 115 (Service Concession Arrangements), an operator that constru