Financial Reporting (Ind AS)Question 5822 of 11
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Under Ind AS 115 'Revenue from Contracts with Customers', which of the following criteria must be met for an entity to recognize revenue over time?

Options

AThe customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs.
BThe entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.
CThe entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
DAny one of Option A, B, or C.
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Correct Answer

✅ Option D — Any one of Option A, B, or C.

All Options:

  • AThe customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs.
  • BThe entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.
  • CThe entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
  • DAny one of Option A, B, or C. ✓

Detailed Solution & Explanation

Correct Answer: Option **D** Explanation: As per Paragraph 35 of Ind AS 115, an entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if any of the following three criteria is met: 1. The customer simultaneously receives and consumes the benefits (e.g., routine cleaning/processing services). 2. The entity's performance creates or enhances an asset that the customer controls (e.g., construction on customer's land). 3. The asset has no alternative use and the entity has an enforceable right to payment for performance completed to date. Hence, meeting ANY one criterion is sufficient.

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