CERTYNEX IFRS ACADEMY

Logivia performs consulting engagements. To fulfil a contract with a customer, it incurs staff and travel costs; no goods are produced and no asset within the scope of another standard arises. The management controller proposes to recognise these costs as inventories under IAS 2. What should be the answer?

The proposal is correct: every cost incurred for a customer is work in progress.

These costs fall under IAS 2 if the entity chooses to present them as inventories in its statement of financial position.

These costs are inventories of supplies, since they are consumed in rendering the services.

These costs do not give rise to inventories; they fall under IFRS 15.