In what scenario would contract costs be included in a cost of inventory? It is very confusing in absence of examples distinguishing between . Suppose a software services company provides 2 years AMC contract starting on 31.1.2021 . For year ended 31.3.2021 I would only recognise 2 months revenue equivalent and defer the rest . I have incurred some costs for set-up & initialising the contract . Would this be inventory(WIP) of our company ? If not can you elaborate on how costs could be routed to WIP rather than contracts costs as such dealt with by ifrs 15/IND AS 115? Thanks.
In what scenario would contract costs be included in a cost of inventory? It is very confusing in absence of examples distinguishing between . Suppose a software services company provides 2 years AMC contract starting on 31.1.2021 . For year ended 31.3.2021 I would only recognise 2 months revenue equivalent and defer the rest . I have incurred some costs for set-up & initialising the contract . Would this be inventory(WIP) of our company ? If not can you elaborate on how costs could be routed to WIP rather than contracts costs as such dealt with by ifrs 15/IND AS 115? Thanks.
In a practical scenario how would we distinguish between an incremental cost and cost to complete contract?