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      Question

      Under Ind AS 115, an entity is required to identify

      Performance Obligations at the inception of a contract. Which of the following is the correct criteria for a good or service to be considered distinct, thereby forming a separate performance obligation? 
      A The customer can benefit from the good or service on its own or together with other readily available resources. Correct Answer Incorrect Answer
      B The entity’s promise to transfer the good or service is separately identifiable from other promises in the contract. Correct Answer Incorrect Answer
      C The good or service is highly dependent on, or highly interrelated with, other goods or services promised in the contract. Correct Answer Incorrect Answer
      D Both (a) and (b) must be satisfied. Correct Answer Incorrect Answer
      E Only (c) must be satisfied, as it represents a combined output Correct Answer Incorrect Answer

      Solution

      To be considered a  distinct performance obligation  under Ind AS 115: 1.      Capable of being distinct:  The customer can use it on its own (or with other resources). 2.      Distinct within the context of the contract:  The promise to transfer is not part of a bundle where the entity provides a significant integration service. If they are highly interrelated (Option C), they are usually combined into a single performance obligation and not distinct.

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