Menu Close

Important Stuff on Ind AS 115, Revenue from Contracts with Customers

Indian Accounting Standard (Ind AS) 115, Revenue from Contracts with Customers, Important Material

→ Brief Summary on Ind AS 115

→ Detailed Overview of Ind AS 115

→ Educational Material on Ind AS 115

→ Quick Reference on Ind AS 115

→ Complete Text of Ind AS 115

Ind AS 115: Revenue from Contracts with Customers

This standard sets the principles about how to recognize revenue and to measure the amount at which revenue is recognized from contracts with customers.

Revenue is the consideration for satisfying performance obligation undertaken in the contract. Revenue is recognized as and when performance obligation is satisfied and it is measured at the amount of transaction price attributable to the satisfied performance obligation.

In an ordinary contract for sale of goods the performance obligation is satisfied when goods are transferred to the customer and revenue (Sale) is recognized at the (sale value) transaction price.

But there may be complications at different stages in revenue recognition and measurement. The different stages can be enumerated as below :
I. Identifying the contract.
II. Identifying performance obligation.
III. Satisfaction of performance obligation.
IV. Determination of and allocation of transaction price to performance obligation.
While stages I to III are for recognition of revenue stage IV is for its measurement.

An entity shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

When (or as) a performance obligation is satisfied, an entity shall recognise as revenue the amount of the transaction price that is allocated to that performance obligation.

The nature, timing and amount of consideration promised by a customer affect the estimate of the transaction price.

An entity shall allocate the transaction price to each performance obligation identified in the contract on a relative stand-alone selling price basis as per the standard, except for allocating discounts, and allocating variable consideration.

Get Important Stuff from CA Blog India Directly in Your Email Inbox:

Follow founder on:

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge