���� \-z@� c��BP�&�ng+6�?�S�K�~��ٿ����2�g߿ A��@r��9A��ƣ(f�S�,�f���7�d��P��.O�9 �R �R2o�(�!N:_��(>sQG��%P��h'܀�� �E:ġ>�F��;�qRn0~���A�>�OB��ʔ����D�Wj�V��A��"|������2�4���6�@�6AW��]��E(:��:?��s����|}\hG� �ާ��:��Y��G� !�— View Revenue Recognition.pdf from FINANCE 101 at Indian Institute of Foreign Trade. endstream endobj 1151 0 obj <>/Metadata 142 0 R/PageLayout/OneColumn/Pages 1136 0 R/StructTreeRoot 171 0 R/Type/Catalog>> endobj 1152 0 obj <>/Font<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 1153 0 obj <>stream Assessment of impact on Revenue and other financial metrics; Understanding recognition and measurement of revenue under Ind AS 115 ]��b����q�i����"��w8=�8�Y�W�ȁf8}ކ3�aK�� tx��g�^삠+v��!�a�{Bhk� ��5Y�liFe�̓T���?����}YV�-ަ��x��B����m̒�N��(�}H)&�,�#� ��o0 Core Principle . Ind AS 115 is effective from reporting periods beginning on or after 1 April 2018 and is largely converged with IFRS 15, Revenue from Contracts with Customers issued by the International Accounting Standards Board (IASB). This could require ����=r�`�}����]��iz�����%�h@q*l�7�u�Ɛk�\ik�l���2�G>k����n�iWN��YڅZh�}.d=LC�'�Q��:O�A0�V���5���H�t�uFx�q�_(� :ߐ~ "Z��/,d�%� �lͦZ Revenue recognition The coronavirus outbreak could affect revenue estimates in ongoing customer contracts, including future revenue contracts, in the scope of Ind AS 115 Revenue from Contracts with Customers in a multiple way. H��WMo�8��W��"Q�,E�&顇. Ind AS 115 provides guidance on modification of Revenue Recognition is a very important aspect in Accounting & often many listed companies try to book higher revenue (popularly known as window dressing) for showing good performance by following proper basis to safeguard them. The new standard replaces existing revenue recognition standards Ind AS 11, Construction Contracts. Under Ind AS 115, revenue is recognised when a customer obtains control of a good or service, while under existing principles of Ind AS, revenue is recognised when there is a transfer of risk and rewards. Key requirements of Ind AS 115 Ind AS 115 requires an entity to focus on the customer’s point of view to decide revenue recognition. Model for Revenue Recognitions. 41.2 Principles of revenue recognition The core principle of Ind AS-115 is that revenue should be recognized from 0 Y� The new standard replaces existing revenue recognition standards Ind AS 11, Construction Contracts and Ind AS 18, Revenue and revised Ind AS 115 focuses on “control approach” for revenue recognition as against the “risk and rewards” approach under Ind AS 18 The timing of revenue recognition might change under Ind AS 115’s control-based model. Indian Accounting Standard (Ind AS) 113 Fair Value Measurement: Indian Accounting Standard (Ind AS) 114 Regulatory Deferral Accounts: Indian Accounting Standard (Ind AS) 115 Revenue from Contracts with Customers: Indian Accounting Standard (Ind AS) 1 Presentation of Financial Statements: Indian Accounting Standard (Ind AS) 2 Inventories !6ll�Gf��_N��$��a졜�c��N�FR�b VzC��Y?R�fQ��K�0�ι� .�X�b4a��1�����\p�l��in��?e1Hn=��n����cj�”�໪����cg���W �Ou@����v��B�=�O� �E���؛M3������R ��cX��8I��{N�S����]��K�`. 1150 0 obj <> endobj 0 It prescribes a five-step model for revenue recognition. Suppliers may need to recognise interest expense on such prepayments made by OEMS. h��T�j�@��}l(a/��B vjҘ;M��A�{A������;3�J�k���>;��9���$L0)C���)�PQLKR1[���x�Vv 6B�����T+��,1�����u�m ����s)�'Y��X'E^�Fůť�B�1����%9'��e��i�^Kw��\f���+�����ۻLJ���6�쳺��j˧E�K32�4�������M��,|V��w>�[ Ind AS 115: Revenue from Contracts with Customers Revenue is defined as income arising in the course of an IFRS 15 is the New Revenue standard issued by IASB to replace the IAS 18 and IAS 11. 1158 0 obj <>/Filter/FlateDecode/ID[<71BF6EABFAAAA546913A793D2CFE8349><706B81522E149548BADBA0BE24EA6057>]/Index[1150 15]/Info 1149 0 R/Length 58/Prev 888913/Root 1151 0 R/Size 1165/Type/XRef/W[1 2 1]>>stream The Ind AS 115 while making certain modifications in the accounting system for revenue recognition; still keeps the provision for percentage of completion method as an option to real estate entities. H�\��j� ��>�w�ٜ%P�r����NR�eby��6l�*����s���)d�o݀�@�q�;��@�ڂ. 1 January 2018. Based on above the Revenue Recognition for a performance obligation is done over time if one of the criteria is met out of three else Revenue Recognition for a performance obligation is done at a point in time. � ����A The new standard also replaces guidance notes on real estate revenue recognition. The new standard seeks to remove inconsistencies and weak- nesses in previous revenue requirements, provide a more robust framework and improve comparability of revenue recognition practices across entities. �?5��3U�v��� The interest expense From the financial year 2018-19, the other two standards IND AS 18 and 11, which are related to revenue … The objective of Ind AS 115 is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. Ind AS 115- Revenue from Contracts with Customers – Impacts on Real Estate Industry. %PDF-1.6 %���� 1465 0 obj <>stream Timing 4. In convergence with IFRS, the Ministry of Corporate Affairs (MCA) issued Ind AS 115, Revenue from Contracts with Customers on 28 March 2018. needs to see whether regulator will continue with the Note in future when new standard on revenue recognition Ind AS 115 ‘Revenue from contracts with customers’ will be applicable or they will withdraw it when Ind AS 115 will be notified. The uncertainty of the revenue from customer contracts This standard specifies accounting treatment for an individual or portfolio of contracts. endstream endobj 1154 0 obj <>stream This necessitates companies to look at their revenue recognition policies and practices and do a complete evaluation of the impact of the new standard since accounting as per Ind AS 115 is expected to bring about significant changes in the way companies recognise, present and disclose their revenue. Sale of goods 2. h�b```�f�\!b`C�����P!��u WŁ��E�ч;k��0M?�à8[a���� �|��O;���a/e9}����R;آg$G.a�o�Ȑ���B{���������6���[��q�H��)�w�^1�p�j��n�c��F�[t������;�2�:���m�[l����t�3���I-�0,��Q*��*�=���:i͖;Qՠ�j �-�wm�=�P��@�*� H���5�"�aʀ6l���'Ԃ�y@��G;=�D��n��&t`�х � �F��4����(����(�6`�� i`���� f8GI13v@d���p�TG�DC1"� d�uM\H�Ɂ��K @{���2�S*?8���d�N��̇.�G0�Q����p�����:�����y%��b`Е�� ��>iF Now that Ind AS 115 seems imminent, this article touches upon the issue of percentage of completion revenue recognition under the new standard. Companies based in India will need to adopt a more detailed process for revenue recognition as the Ind AS 115 removes scope for interpretation in several areas. This one day programme is designed to meet following objectives in implementation of Ind AS 115. notified Ind AS 115, Revenue from Contracts with Customers. Ind AS 115 is based on core principle that requires an entity to recognize revenue: In a manner that depicts the transfer of goods or services to customers. Revenue recognition under the new revenue standard, Ind AS 115, Revenue from Contracts with Customers, is expected to pose challenges to the power sector. h�bbd``b`�$:�� �|��I��X*@��A&F^�:Ft��߰? 7 Applying Ind AS: ccounting considerations due to the OI19 outreak 3. 1164 0 obj <>stream The Ind AS approach to Revenue from Customers Revenue recognition as per Ind AS 115 has been described hereunder with the help of an example in order to give a bird’s eye view of the Ind AS approach to Revenue from Customers. 1 January 2018. ��»sݬR��+�s�i�A��� V�̩Q@��WNW����������Ȩ�wB>R�!C��5�S����ژj��*nb�z��v��3�3�K�aQN�ž퇵�A�{o��p0�N����N�L%���qր���Cd暿Kx�*����δCb�>���#��(�=K Revenue recognition under Ind AS 115. �� ��]� 3��#>�(�X�{�ۿ�Ov�+�7Q�"/��&�rTK�p�~�}h��U�,���r��QR�.Ӷ}�����ԢJ'�=�&-��b��>)4����~�fV �?��[',g��ˆnG-��L�ʙ�R����P��p��;�\x endstream endobj 1466 0 obj <>stream X enters into a 12-month telecom plan with Airtel . ����������ϸ���Ώyvf�2��Q,K~��P{�Lw��Ɔ�9U !^?f��zZ�bU��mX�b��E�.xadՅ�����b���-d���}L�����ҭ"N��Yȴ��HT]�XQ]���#̔���%h݀�=���_��W��&�������f���c�S���3�h��|ꑶ~-���ǎ5��[J��)V1�"���z��ÇU�ZD�{�OH�=�+�N��zr%>@;�.S�y�g�]�ͷr�I�V��oM�����;4sv+���vx�h���E�v�X �`S�Xp*op�?�|otA��:�gB����X�}�8�h�X���֙�}�>���32��A샱(��{�(_�F��aq_b�F�ހ֒!�,�9�A�`P��-74b6�dSG�x��1VVF������!l�]ѿ�7�\NX�v�,(ZBT`� &���ĭ(�Ʉ/�V�{��c4��91:Ӈ��3����� Background ... 5 step model for revenue recognition . accounting periods beginning on or after 1 April 2018, thus aligning the Ind AS 115 applicability date with the IFRS applicability date i.e. Rendering of Services 3. April 2018 i.e. The standard is applicable from accounting periods beginning on or after 1st April 2018 A customer obtains control when it has the ability to direct the … This area is further complicated by the potential deferment of the Ind AS 115 and the likelihood of the application of Ind AS 18, Revenue and Ind AS 11, Construction Contracts along It prescribes only one underlying principle for revenue recognition, which is the transfer of control over goods or services. IND AS 115 aims at providing the following details related to contractual revenue and cash flows to the users of financial statements: 1. E̥��E����0���9qr9n�%_k�o���o��u�WV�x��~�x�n�k����^k2/�,!�Ϲ�jG��!�v�z[-� FY 2018-19 • The core principle of Ind- AS 115 is that revenue needs to be recognized when the entity transfers control of goods and services to customers at an amount that entity expects to … In view of the above, recognition of revenue as the construction progresses is possible considering the prevalent long established legal system/jurisprudence in India, and facts and circumstances of individual case/contract. deferred or advance) indicate that such contracts contain a significant financing component that adjusts the transaction price. This Standard should be applied in accounting for revenue arising from the following transactions: 1. Certain contracts, such as those covering leases, insurance, non-warranty guaran-tee, and other financial instructions are covered under other Standards. Use of entity assets yielding Interest, Royalties or Dividends Preface. other Standards) are subject to the revenue recognition standard. 6[���W�][�3��p�ظom,R>�X,��{XDGe�ܾ����!�x!~џ�^I�A4�!S��P!$�� ��e It may be noted that Paragraph 35(b) & (c) of Ind AS 115 are intended to address situations of real estate sector. Ind AS 115 is applicable from 1 April 2018, i.e., FY 2018–19. The new revenue recognition standard [(Topic 606/ IFRS 15 / exposure draft Ind AS 115), hereafter through this document the reference to “new revenue recognition standard” implies Topic 606/ IFRS 15 / exposure draft Ind AS 115] requires management to use judgment to (1) determine whether contracts with one customer On 28 March 2018, the MCA notified Ind AS 115, a new revenue recognition standard that replaces existing Ind AS 11 and Ind AS 18. revenue recognition standard Ind AS 115, suppliers need to consider whether these payment terms (i.e. Under Ind AS 18, a contract for the sale of goods normally gives rise to revenue recognition at the time of delivery. Revenue is typically recognized once the goods reach the buyer when the risks and rewards of ownership typically transfer to the customer. The core principle of Ind AS 115 is that revenue needs to be Under Ind AS 115, an entity recognises revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer. IND AS 115 is in sync with RERA that mandates sales proceeds of under construction projects to be kept in a separate escrow account and not treat it as revenue recognition . Nature 2. 2a\JВaŪ�_����rߖ�8-���i�U� K���*�wf�S�i(;� �� The notification from MCA is a welcome step towards aligning the new standard under Ind AS to the global adoption of new revenue recognition standards under IFRS. Contents Background 5 step model of revenue recognition Recognition & Measurement – over time or at a point in time . Ind AS 115 differs significantly as compared to existing revenue recognition principles. Amount 3. and Ind AS 18, Revenue endstream endobj startxref endstream endobj 1155 0 obj <>stream Ind AS 115 (Revenue from contracts with customers) Presentedby CA Manoj Pati . The terms of the plan are as follows: 1. Implementation of Ind AS will have consequential impact on bonuses, income tax computation, key financial ratios. IFRS 15 provides the 5 step framework on how and when to recognize the sale. AS 11 (Construction contract) and Ind-AS 18 (Revenue recognition) • Ind-AS 115 is applicable from 1. st . IND AS 115 - The New revenue recognition standard Published on February 4, 2019 February 4, 2019 • 14 Likes • 2 Comments After more than a decade of work, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) had published their largely converged standards on revenue recognition in May, 2014. %%EOF %PDF-1.5 %���� At an amount that reflects the consideration the entity expects to be entitled to … Ind AS 115 provides a comprehensive framework for recognising revenue from contracts with customers and would apply to all revenue contracts with customers including construction contracts.