CONTRACT COSTS AND LIABILITIES |
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| CONTRACT COSTS AND LIABILITIES | Note 8: CONTRACT COSTS AND LIABILITIES
Contract costs
Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of salaries and related costs, amortization of intangible assets, and depreciation of property and equipment in developing customized “data-to-AI” solutions for customers where such costs are expected to be recovered under existing contracts. Contract costs are recognized as a cost of revenue upon transfer of the customized data-to-AI solutions to customers.
The movement of contract costs was as follows:
Contract liabilities
The Company acquired Aberfeldy on January 30, 2026. In accordance with ASC 805 and ASU 2021-08, the Company recognized and measured the contract liabilities assumed from Aberfeldy in accordance with ASC 606, Revenue from Contracts with Customers, as if the Company had originated the contracts at the acquisition date. The contract liabilities assumed represent amounts received up front from customers for customized data-to-AI solutions for which the underlying services had not yet been delivered at the acquisition date. The Company had no contract liabilities from its own operations prior to the acquisition of Aberfeldy.
As the Company delivers the related services to customers, the acquired contract liabilities are reclassified to revenue. All performance obligations related to these contract liabilities are expected to be satisfied within one year.
The following table provides information about the Company’s contract liabilities arising from contracts with customers.
The Company’s remaining performance obligations represent the amount of the transaction price for which service has not been performed. As of July 31, 2026, the aggregate amount of the transaction price allocated for the remaining performance obligations amounted to $5.8 million. The Company expects to recognize revenue of $5.8 million arising from contract liabilities as of July 31, 2026, for the financial year ending April 30, 2027.
AIRWA INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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