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Under Appendix D of Ind AS 115, an operator that gets the RIGHT TO CHARGE USERS of the public service (no guaranteed payments from the grantor) recognises:
AA financial asset — the right represents a future cash inflow
BAn inventory — the operator is in effect selling the right to use the asset
CAn INTANGIBLE asset — the right is a licence with cash flows contingent on actual usage
DA property, plant and equipment item — the operator controls the infrastructure
Answer & Solution
Correct answer: C. An INTANGIBLE asset — the right is a licence with cash flows contingent on actual usage
Para 17 of Appendix D — when consideration depends on the extent of public use (no unconditional cash guarantee from grantor), the operator does NOT have an unconditional right to cash. An INTANGIBLE asset is recognised, measured at the fair value of the consideration received (i.e., construction services). Under Ind AS 38, this intangible is amortised over the concession's operation phase.
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