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Under Appendix D of Ind AS 115, when an operator must MAINTAIN OR RESTORE infrastructure as a condition of its licence (excluding any upgrade element), this obligation is:
ADisclosed only as a contingent liability under Ind AS 37
BRecognised under Ind AS 16 as part of asset retirement obligation
CCapitalised as part of the intangible/financial asset and amortised over the concession
DRecognised and measured under Ind AS 37 (Provisions) — at the best estimate of expenditure required to settle the obligation at the reporting date
Answer & Solution
Correct answer: D. Recognised and measured under Ind AS 37 (Provisions) — at the best estimate of expenditure required to settle the obligation at the reporting date
Para 21 of Appendix D — maintenance/restoration obligations (excluding upgrades) are governed by Ind AS 37 — recognised as a PROVISION at best-estimate of settlement expenditure. Upgrade elements are separate POs under Ind AS 115. Contingent-liability treatment (mere disclosure) is wrong because the obligation is present and probable. Ind AS 16 retirement-obligation treatment doesn't apply (the operator doesn't own the infrastructure).
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