Contract Boundary under Ind AS 117

Contract boundary under Ind AS 117 defines the scope of a contract for accounting purposes. It determines which cash flows should be included in the measurement of the contract's financial performance.

Example:

Consider a life insurance policy with a guaranteed cash value and a death benefit. Under Ind AS 117, the contract boundary would generally include the following cash flows:

Premium payments: The initial premium and any subsequent premium payments.

Guaranteed cash value: The amount the insurer is obligated to pay to the policyholder if they surrender the policy.

Death benefit: The amount the insurer is obligated to pay to the beneficiary upon the policyholder's death.

However, if the policy includes optional features, such as additional riders or investment options, these might be considered separate contracts with their own boundaries, depending on the specific terms and conditions.