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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › MACAU & CO M/J 16
Ma’am IFRS 15 states that- “The costs of fulfilling a contract are recognised as an asset if they do not fall within the scope of another standard (such as IAS 2 Inventories) and the entity expects them to be recovered.”
so then why in part b) the design costs which have been recognised as inventory(WIP- IAS 2 would have been applied by Kowloon) are being considered under IFRS 15’s above rule?
Design costs are not inventory – you can’t see/touch a quantity, for example. So it is IFRS 15 that says these costs should be recognised as an asset.