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An entity shall recognise an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria, EXCEPT

  • An entity shall recognise an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria, EXCEPT -

    The costs generate or enhance resources of the entity that will be used in satisfying performance obligations in the future

    The costs are indirect costs such as administrative costs that cannot be allocated to the contract and is not associated with any specific contract with a customer

    The costs are expected to be recovered

    The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify (example - direct labour, materials, allocated costs such as insurance and depreciation, payment to subcontractors)

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