EITHER Assume operating cycle to be of twelve months. Classify the following deposits given by an entity in automobile industry during the year…

(i) Electricity Deposit - At all points of time, the deposit is recoverable on demand, when the connection is not required. However, practically, such electric connection is required as long as the entity exists. Hence, from a commercial reality perspective, an entity does not expect to realise the asset within twelve months from the end of the reporting period. Hence, electricity deposit should be classified as a non-current asset. (ii) Tender Deposit - In the given case, tender is likely to be opened and awarded to the lowest bidder within six months. Therefore, it is expected that the refund of tender deposit will also be received within a few days or a month from the date of tender being opened and awarded. Hence, tender deposit will be classified as current asset in the books of the entity as on 31st March, 2025. (iii) GST Demand Deposit paid under dispute - Since appeal is likely to be heard after 30th June, 2026 i.e., 15 months from 31st March, 2025 (reporting date), it should classify such GST demand deposit as non-current asset. (iv) Earnest Money Deposit - Since the job contract is of long term in nature and is expected to be completed by 31st May, 2026, i.e., 14 months from 31st March, 2025 (reporting date), the earnest money deposit should be classified as non-current asset.