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1 The objective of this Standard 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. Meeting the objective.
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The core principle of Ind AS 115 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
- Objective
- Scope
- Recognition
- Measurement
- Contract Cost
- Presentation
IND AS 115 aims at providing the following details related to contractual revenue and cash flows to the users of financial statements: 1. Nature 2. Amount 3. Timing 4. The uncertainty of the revenue from customer contracts This standard specifies accounting treatment for an individual or portfolio of contracts.
An entity should apply this standard all customer contracts except: 1. Lease contract – IND AS 17 2. Insurance contracts – IND AS 104 3. Financial Instruments and other contractual rights or obligations – IND AS 109 & 110 etc 4. Non-monetary exchanges between entities doing similar business to facilitate sales to customers
Recognition of revenue is explained as below: a) Identifying the Contract Following criteria should be met for accounting a contract under this standard: 1. Parties to the contract have approved the contract 2. Parties are committed to performing their respective obligations 3. Each party’s rights and payment for the contract is identified 4. A con...
An entity shall recognise the amount of allocated transaction price as revenue once a performance obligation is satisfied. Transaction price which can be fixed or variable amount is determined based on the terms of contract and entity’s customary practice. a) Variable Consideration If the consideration includes a variable amount, an entity should e...
Incremental cost of obtaining a contract with a customer – Entity should recognise as an asset if the entity expects to recover those costs. These are expenses which an entity would not have incurred if the contract had not been obtained (eg. sales commission) Cost to fulfil a contract – Entity should recognise an asset from the cost incurred to fu...
“When either party to a contract has performed, en entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment. An entity shall present any unconditional rights to consideration separately as a receivable.”
The core principle of Ind AS 115 is that revenue needs to be recognised when an entity transfers the control of goods and services to customers at an amount that the entity expects to be entitled. Ind AS 115 is based on a five-step model shown below: 1. Identify the Contract with the Customer.
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Aug 2, 2018 · 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
Ind AS 115 is a new standard based on IFRS 15 that aligns the revenue recognition date for Indian entities with international standards. It introduces a five-step model to determine when and how to recognise revenue, and affects various sectors and transactions.
With effect from financial year beginning from 1 April 2018, Ind AS 115 would replace the existing Ind AS standards, i.e., Ind AS 18 Revenue, Ind AS 11 Construction Contracts and their associated appendices.
