Accounting standards

1985
Mmr

As-9 revenue recognition

OBJECTIVE

Basis Principles for recognition of revenue in statement of Pandi Acc

1
Which arises in
SCOPE : EACH AND EVERY
Due course of
BUSINESS CONCERN
Business
APPLICABLE

-
509
interest
-
ROS

of enterprise dividends
- Use resources
by others yielding

royalty
NOT APPLICABLE :

AS 7 =
rev from construction contracts
AS 12
= rex from 99 and DGG
AS 19
= new from leases

IRDA : new from insurance contracts

exclusions From Revenue :

as -2
- unrealised gains from current assets [stock]

AS-10 - Realized and unrealised gains from Non current Assets

-
.

As-11 -
u 11 " "
from F-Crans . FC operations

"

IGAAPS
- " "
" "

Fluctuations
from obligations OF Fc
is

translation
Of FC .
 Realised gain
unrealised

sale m c.-
a Revaluation r

@ Higher
price

on settlement obligation Restatement of Bu / carrying

ant
@ lower price
C @ lowerprice )

DEEIN 1170M
cash

•
Revenue is the gross inflow OF receivables

Other consideration
'
'

'

FROM *
.
.

Sog Ros use of enterprise

µEc0U°É°
☐ BUSINESS (int
resource

,
die ,
by others

royalty)
of

* In
agency relationship , Revenue =/ Gross inflow

( Commission )

only
>
net amount
'
 SALE OF GOODS

Revenue recognised when

is
only
SIGNIFICANT RISK 2 REWARDS
- ownership is transferred >

ARE TRANS FERED

&

-
there should be no

uncertainty in

collection

AS IF UNCERTAIN 117 EXIST

POSTPONE
DONT RECOG .
REVENUE >

IMMEDIATELY . . -
TILL RECEIVED

☒ IF UNCERTAIN IN ARAISES SUBSEQUENTLY

> CREATE A
"
"
PROVISION
>

DONT REVERSE '

SPECIAL CASES

SITUATION RECOGNITION CRITERIA

DELIVERY IS DELAYED ALL OF THE CONDITIONS

@
-
STOCK IN HAND

BUYER & BUYER TIRE IS

-
IDENTIFIED
2
RED Accepted
TRANSFERED
B, ,, -
PACKED

-
READY FOR DELIVERY .
② DELIVERY IS SUBJECT TO

INSPECTION

IMSM-L.CA MOM INSPECTION

SPECIFIC
GENERAL
6

ALL te
v

GOOD INSTALLED NOT AT ALL

and Inspected CONSIDERED .

by customer .

"
.

③ SALE OR RETURN BASIS ONLY when customer

' '

APPROVES

EXPRESSED IMPLIED

DIRECT APPROVAL ✗

BY
-
SYMBOLIZES
EXPRESSING
HIS WISH FOR -
LAPSE OF TIME

PURCHASE .

USAGE /SALE
'
-

④ GUARANTEED SALES 2nd RECOGNISE REVENUE IMMEDIATELY

Unlimited night for return BUT ,
CREATE A PROVISION FOR

of good -
FUTURE
-

⑤ CONSIGNMENT SALES consignor consignee

> when ee
u
sold to
u
GROSS INFLOW IIRD
MET AMOUNT
OF Sog - PARTY
( com ) .
⑥ CASH ON DELIVERY SALES GOOD DELIVERED

CASH IS RECEIVED EITHER BY

PRIMA PAL @R) AGENT

only
⑦ Installment SALES @TIME OF principal
@ Ist inst
IMST - SALE US HIRE DURCH SALE entering or

1h10 Down
ownership @ Last
Payment
'

299 remeht
.

"F installment
-

immediate itself .

p+ Proportionately ,

When the good is manufactured

⑧ special orders and identified

shipments packed

Ready for
delivery
( Part Payment till full payment

µBgE€°
M
received ]
LLA
→ ±µsM- a-
manufactures on order basis
- installation
i e-
, JIT strategy -
Inspection by customer

hl JOB costing

GEM :
only when last payment
9 customer paid in is made [ONLY After delivery of
installments and goods ]
foods must be delivered
_ EXCEPTION
only when last Installment
is When substantial deposit is made
paid .

by customer and for remaining

"

ant seller is having certainty in

collection "
?⃝
 He

seller is having confidence

that sale is consumerate

( absolute ]

④ SALE 10 INTERMEDIARY PARTY IF ownership is T/ Fed

↓
Sign raid 2

,
immediately neeosn .

☆ IF safe is sublecret to return

( of unsold stock )

④ SUBSCRIPTIONS FOR IF SUBS Amt 15

PUBLICATIONS .

CONSTANT HARU

He H
.

SLM
NO . OF COPIES

SOLD i. e ,

SAVE VALUE

for)
in any other

sand r basis

-
consistency

④ TD and UR -
Though received -
Should not be

recognised as revenue

u
,
Volume → It represents to in
2
costs .

Trade Rebate .

it should be deducted
dis .
' "
Fam QP Quantity
= PURCHASE
UNREALISED GAINS 134 SELLING
↓
excluded from revenue .

BUT , in the standard itself w r E

- .
Agri crops & mineral
ores

unrealised
gains
He
DEALTH

(JUST TO CLARIFY

INDUSTRIAL NORMS)
Agri crops
unrealised
wine
gains min ones -

Performance is
substantially -
before selling of goods .

tb before
i e
-
,
harvesting of asri crops .

only when s (or)

-
govt q'ee before extraction of mineral ones .

-
Forward exch contract

there exists a mkt with

-

negligible risk

⑨
of
value
stock RR @ NRU
 RENDERING OF SERVICES

Revenue is to be recognised only when >

~ service is rendered

~ no uncertainty in collection of amt

.

As IF UNCERTAIN 117 EXIST

POSTPONE
DONT RECOG .
REVENUE >

IMMEDIATELY . . -
TILL RECEIVED

☒ IF UNCERTAIN 1M ARAISES SUBSEQUENTLY

> CREATE A
"
"
PROVISION
>

DONT REVERSE '

BASIS completed service

proportionate
contract
completion
method
method .

ACT
Generally
>1
① NO -
OF ACTUAL : I

SERVICES
exception >1 Act
( TO BE EXECUTED )
1
①
M
IF add act is
substantially
related to original act .

②
M
Even if add act not done

we can
say substantially act

is completed .
② Revenue After completion of -1 .
completion method

Recogm Sole Act / Final act

.
Basis :

-
contract value

-
contract cost

- NO -
Of Acts
-
other - Sando basis

consistently
'

BASIS Unable to

determine
or

service includes

Indeterminable no .
of Acts

>
semC)
SPECIAL CASES

SITUATION REVENUE RECDG .

① Installation fees Soa ROS

ne

when it is u

exclusively Installation
provided
along with
service provided

Soa 14
re -
installation ✓

completed
inspection
.
-
✓

② ADUERIAISEMENT IT should be recognised by print

media only
- When it appears b4 public
 i e , after
-

/ publishing and
circulating )

③ Financial service services

Commission
once for all continuous
*DD basis
basis
He He
service is services shall
provided only
be continued
at inception of
till the loan

☐ king loan
term completes
He i.e.
maintaining
complete loan .

service
the
contract "

PROP COMPLETION
method .
-

METHOD
ie -
, after % COMPLETION

completion METHOD .

of service

I
④ ADMISSION FEES
.

single event BUNDLE OF EVENTS

'

☐
He
^
when event
PROPORTIONATE
takes place '

BASIS
for]

after completion
of the event .

⑤ RUNON FEES -
over the
period of instructions

CLASSES
on SLM Basis

( but can also Follow any other which

Is sand r consistently )
⑥ Entrance fees Gen : CAPITALISED

EXCEPTION : PRL

to
A 5--9 .
IGAAPS → PERIODICITY CONCEPT

⑦ membership fees exclusively misnipt

on 's hip other services

is re

as and when apportion among

received all services in

sander basis

consistently .

te
⑧ Insurance agents te
Commission Policy Renewal
He POLICIES

after the te
commencement after renewal

Of POLICY .
is done .

USE OF ENTERPRISE' RESOURCES BY OTHERS

No uncertainty in collection

INTEREST recognize on propm basis

Due ✗ ROI ✗
MIZ
V

received as the cash resources

are used by others .

 DIVIDEND
only when right to receive is established

C-e. only when the

dirt is declared
by sit in AGM )
U

REWARD FOR
HOLDING INVESTMENT .

ROYALTY = AS PER AGG .

( Acc BASIS /
Desnodicltrg basis]

Tees / income collected for

using intangible assets

of our enterprise .

AS IF UNCERTAIN 117 EXIST

POSTPONE
DONT RECOG .
REVENUE >

IMMEDIATELY . . -
TILL RECEIVED

☒ IF UNCERTAIN IN ARAISES SUBSEQUENTLY

☒ INT RECEIVABLE DR
= tom , :
TO INT ACC

SREVER.SE#C) REC : INT Acc ☐R

/ to P and L Ace

NEXT YR
SAME UR
BAL
?
UNCERTAIN P and 1 Acc Dr
IF NIXTYR

iz int nee Acc

s CANCER
RECEIVABLE
¢ .
 DISCLOSURES

1 . Gross T 10 ✗ ×

+, _
excise GST a ^

- in Pond I

Met T / 0 ✗ ✗ u

2- DISCL IF RR IS POSTPONED
3- ACC
Policy for RR to be disclosed .

[If any change in policy

deal → As-1 & AS -5 ] A
.
IF

>

Prescribed
>
rules

{ cashflow statements -
U

ITC
DMn
ETC
^
SANATH %AFn-ga.gg
NBUAssmE MAHAR
-
SEGMENTS
GEOGRAPHICAL
SEGMENT
⑥
BUSINESS
SEGMENT
OPERATION Geosratpw.cat segment
operations

on

sale of
~
assets
settlement
of liabilities
*
PSHIP

PROPRI
} CD -w
Etc .

Convert
?⃝
 IF DESIRED ✓

HE

> PARA -9 OF AS -24 a

→ People stop
PRODUCT
buying
Gradually .

✗
1- DEMAND ↓

LIQUIDATION

( LIQUIDATION )
(NOT
DISCONTINUING )

[NO EFFECT so SIOPDED TO SAVE COST ]

 -

(FIRST DISCLOSURE)

DO FORM : 01-06

DO APP

DO ANN :
: 10-06

20^06
§
&
DO BINDING : 15-06

I
☐
p
SPR
OIF

EFFEUED

SEO
SEG .

Areas

LOEANOM
FUNCTION
I
MO.ote.es f. A → AS-10

getting compensated
[
.

standards CUR # AS-2

As per respective
→

INTA → AS-26

9
2

IDE 31-03-21
→
What ? 15-06-20 FIS
↳ DISCL
@
.

BUS SEG .
(INITIAL DISCL EVENT]
cy
.

GEO SES

WHY ?
]
< entirety ?
1-
piecemeal ?
Abandonment?
15-06
→ piecemeal ?
> entirety ?

)
f(NOT SETTLED ]
a ENTIRETY = AS A SINGLE OP
F- ¢ NOT SOLD ]

¢ PIECEMEAL EPERATE

BERNT M-✗ RATE

FOR
DFRMT ASSETS
 > Reportable
(or)
(AS 17 )
-

NOT
=

Interim Financial Reporting .

 ÷
:

RP RE
↑ Got -

A → B RP
>
"
B
A
Got . Got . 3 RE
A > B > E
S F boy . B 60%
} IF
>
>
< Got R ←
-
INDIRECTLY com -
Cryin p A
>c Got .
BRE Tc } RP
A

20
r

'N'dim
chain
only I SUBS
} All BECOME RP to All

¥ ↓
B, C/ D
 v15

,¥g,±
"
" rp

A B ,
C
,
D

A
A
B

c
A

A couentures
D
W ASSO
'

are not

relatives .

PARA 31C) of AS -78

3

om other

v0

Ds
is

on aughter
?⃝
 •

Q"r⑤

:
←
☐
SINGLE

t
-

a
NO NEED

CONS •
f-/ s 2)
 MANY Frequently
>
RELATED volume ness

PARTIES
similar in nature

Mr
:
EY

-
-
<

s -

-
-

-
 0Mt THAN OP and

•
nary
✓
-

SAME AS ABOVE
-

EXCEPT

\
exceptions : ,

EXCLUSIONS .

a
✓

✓
 EXCLUSIONS

INCLUSIONS
µ µ

Z
 =/ ENT REY
-

10%
→

≥ 90% TOTAL PROFITS@

^

NM-CWSS.ES
I II It IU I total

300 35
}
PROFIT 200 POO =
↑ 350×10-1
- -
. .

(roo ) 350
Wss - _ ( too] izz,

I ^
ALL ARE REPORTABLE SEGMENTS

≥ rot
.

Intersegment Sales ✗

7753%

✓ ✓ ✓ -

✓ ~
✓ ✓ ✓

÷
I ✓ Nur
1"
-
 assets

UST -

→ ← SR SESRCSULT

SEGI 90 50 40

it
SEGII 100 70 30

120 150 ( 30)

SEG /

≈
=
Tina
(

= →
= →
A =L

←
I R E- __ Res
'

e-

" "
ENT REU
-
 -

;
A
T
O
R

NOT WISH
mandatory
*
 GOODWILL

:
Ff FIXED Amount

??÷¥
SEDER
>
µ Always not req
. REALISING
ex .mu , ,

( CD i DID : ETC)
,
exception

✓
✓
✓
✓

5- ADD ZSUBSTRACT

FU OF SEC ISSUED
MORE

FU OF Intangible EVIDENT

Asset Acey -
 FU OF ASSET GIVEN Up
> FIRST PREF "

IF CLEARLY
fu OF IMT ASSET ACQ
7 -
> '

EVIDENT

FU OF ASSET GIVEN UP

F SAME AS NOT SIMILAR

≤ FU
OR
OF IMT - ASSET Aces .

> MET BU OF Asset

given up

apple.cat#

s
-

ear .
in th

- cost Reliable
→
-

FEB → Probable .

Intention resources → Use / sell → Rccogcr

Feasibility → →

0^0
 bookman

✗✗✗
ONLY
✗✗ ✗

xxx

✗ ✗ ✗

( AS-16)
✗✗ ✗

✓ ✓ ✓
y

-"""ʳᵗ→ᵗ
INTANGIBLE → Amorti

method g- is not

accepted H
WDU

6 →
is
nxt 34 '
sale

IF
①
(cannot use for
purpose )
some
IF
no
£
AS 29 Provisions Contingent assets and contingent liabilities

OBJECTIVE ?

Provision
-

>
RE LOG CRITERIA
-

→
AS -29 deals with liabilities
>
measurement basis of contingent
it
Disclosure req contingent assets
.
_

SCOPE ?
created on → NOT APPLICABLE
>
assets
" eg : PBD
Provision Is a
liability
which can be measured
"
ONLY by using a substantial degree of estimation

in

Liability is a
present obligation arising From Past events ,

the settlement of which is expected to result in an outflow of

''
FUTURE ECONOMIC BENEFITS FROM the entity
-

r
An Obligation Is called as Present obligation if based
on evidence available its existence on Bls dare is
"
considered as
'

PROBABLE ?

I
•
more likely than not

OCC)
prob ( prob ( non
•
> OCC)

-
more than 50-1 . chances
 r
"

01344 ANON is a duty or responsibility to act

>
Binding contracts
in a certain
way arising from
statutory
>

u Business practices
or customs to

maintain Good
relationship .

"

Past events becomes obligatory event when entity -

"
have no alternative to skip such event

COMM NG ENT LIABILITY :

contingent liability is

(a) A possible obligation that arises From Past events and the

existence of which will be confirmed only by the occurrence or

non occurrence
-

of one or more uncertain Future events which are

within the control of the

not
fully entity
.

(b) A present obligation arising From past events but it is

not recognised as a provision because

-
outflow OF FEB are not probable /
-
A reliable estimate of obligation can not be made .
 PROVISION
ANY WALDM
OF → ⊕
PROVISION ↓
LIABILITY measured comin
with UAB .

substantial
degree of ESTM

i µ a

present Past outflow

oblige .
event of certain
resources
u

PROB > 50%

'

. .
PBDD is not a provision by AS -29 -

CRD Inns - case has been filed on consumer court & notice of Penalty
Of 2061ms is received .

>
qM3
Lawyer PAST EVENTS
co.

t -200000

-715-1 .

WIN 50T
50%
obligation
.

Present
PAID afar
u
fynalisation _
i. PROVISION .

IF WSSY .
550-1 .

Then present
Obligation .
CRD -
2 PART A
-

p-sunuke.ly to meet contracted oblige .

PAST
31-03 ↓
LUNT
a -2016 Present obligation
2015-16 2016-17
ECONOMIC
SALE CONTRACT
SUN LTD > ✗ LTD FIRST
1. g-or
OUTFLOW
SCR MONTH IFFAID
,

6 µ ✗ up

Profit DEUUERY SUMLIN

MR

-
: PROVISION → ✓

CRD -4

0kg .
→ contaminating
land for →
MO LEGISLATION

Several years FOR

CLEANING outflow
UP OFRES

PAST EVENT TILL

VIRTUALLY CERTAIN
NOW •

31.03
LAW conning
2017

PRESENT OBLIG '

CRD b -

smoke filters ( cost : 300000 )

00 DID NOT
NEW LEGISLATION IS CO .
30.11.2019
0 7 DO
0
6

IF DELAYED ! 100001 -

"

# ' "
smoke Act Ismene
31-03-2019 No
^
31.03.2020 YES
Filled
→
PENALTY NO ALT At
CRD 5 -

co .
Operates an
85-1 .
OF cost relate to

Offshore oilfield
REMOVAL RESTORATION OF
+
Where its licence ng OF 01L
g DAMAGES TO
R' 9
Agqrement requires BUILDING
to remove the oil rig and
@ end of PROD Me restore arise through
is -1
.
→ extraction
the seabed

IF Act there → NO OBUU ANON → NO PROV .

85% PROV
'
- .

15-1
. NO '

SDEUAL POINTS OF PROVISION :

① Should not be Discounted

② Should be before Tax

③ Risk and uncertainty should be considered

[ Probability factor should be Applied ]

CRD 3 -

AFTER
AUD →
SALE

warranty
for making provision for warranty
FOR 24 RS p
I 2

less then lyr more than tyr

@ 2T . @ 3 -1 .
CRD -10

Probability FACTOR

10×40%01--120000 ✓

10×10-1 . 01=200000 ✓

5×30%01=100000 ✓

5×20-1.01^-210000 ✓

MANU
REIMBURSEMENTS ( Back to Back warranty )
v9
RETAILER

of
CONSUMER

p p
IF SELLER has IF seller has

obligation no obligation
↓
COMUNE SALES ]
a • ↓
Reimbursement Reimbursement ×
is 15 NOT
CERTAIN certain

I d o o

PROUCLIAB) REIMB prob REIMB

CASSET)
✓ ✗ CRD 8 -
.

→ Pandi Collet off) ✓

 Accounting for taxes on income
ARC Greater than Pax DTL or

DDA Rey .

I 3- 1 4 14-15
✓

TAX -
ACC Income .

[60K ✗ 30 -1 ] .