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Editorial Board on Accounts and Audit

    by CHANDRA on Thursday, July 11, 2019 at 04:45 PM

    Dear Sir, As per earlier IND AS, Revenue was recognized based on the % of completion method but as per New IND AS 115 what is the procedure of Revenue Recognition as per IND AS 115

    Replied byEditorial Board Monday, July 15, 2019 at 07:48 PM

    Under Ind AS 115, the revenue is recognised on the basis of following five-step model:
    1. Identification of contracts (oral or written) between the entity and customers;
    2. Identification of performance obligations in the contract;
    3. Determination of transaction price;
    4. Allocation of transaction price to performance obligations; and
    5. Recognition of revenue as and when performance obligations are satisfied

    In short, under Ind AS 115, revenue is recognised as or when performance obligations are satisfied by the entity in the manner as specified in the contract. Performance obligations are said to be satisfied when the control of goods or services promised in the contract are transferred to the customer. Therefore, percentage of completion method can be applied only when control is transferred under Ind AS 115.

    Ind AS 115 have two approaches, recognising revenue at a point in time or recognising revenue over the time (Similar to percentage of completion method).

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