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Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
AN EXTRACT FROM IND AS DRONE CHARTS
FOR ALL CA FINAL STUDENTS NEW COURSEALSO RELEVANT FOR CA FINAL OLD COURSE
Ind AS - 115
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 2CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 2
A. Applicability & Scope Step I . Contract with customerB. 5 Step Model
1. Ind AS applies only to contracts with customers
2. Customers : Party contracted to obtain g/s (goods/services) that are output of
3. Ind AS N.A. on contracts which
output between collaborators.
Eg. A Ltd., has land, B. Ltd., contracts to construct bldg. on
between then in equal
4. Ind N.A. on sale of assets that
ordinary course of business like PPE held for sale, Sale of Invst. Property, Financial assets etc.
Ind AS refers to Ind AS 115
assets. In such case Ind AS 115 will become relevant. (Eg) Ind
-ness of leasing out assets on
revenue on sale of such assets as per Ind AS 115. (Eg.) When to Derecognise a PPE? Ind AS 16 refers to principles of Ind AS 115.
Incremental Contracts the contract
is prescribed
follow that Ind AS, else apply Ind AS 115.
contract and to be covered in scope of this Ind AS
each
O regarding g/s to be transferred (t/f)
2
payment terms for g/s to be transferred
3Contract to have commercial substance i.e. CFs of asset transferred to customer for the customer
-ent from CFs to the
Exchange of similar g/s be-tween 2
is not a contract for sale of g/s.
4
probable to collect the considera-
Checked: When consid. will
later expects to bear further discounts/ concessions when the consid. * will be payable, it shall not be treated as
this condi-
certainty exist, no revenue
this Ind AS.
51
approved and
to perform the contract
Oral / Cus-tomary or
(Implied)
• Agreement between
creates enforceable
for one's promise) and
under the contract)•
have right to unilater-ally cancel the wholly unperformed contract without paying com-
-formed contract;
&
not transferred
g/s
not yet received
to receive price in the
contract +
Can be unilaterally i.e. at choice of either party without consent of other;
+ Cancelled w/o
payable
*Then it is not treated as a contract
B. Criteria for contract5. Ind AS N.A. to: a) Insurance Contracts b) Financial Instruments c) Leases (unless such standard pro-vides to refer to Ind AS 115)
Eg. -
Ind AS 109 refers to Ind AS 115.
6. Ind AS N.A. to non-mon-etary exchange between
-tate sales to customer or
Eg. One Oil Co. gives Oil to other oil Co. at one
exchange for Oil
customers are covered in this Ind AS.
7. Scope:certain extent
(Contract Costs)
Analysis
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 1
C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 3CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 3
C Ind AS Scope : Covers contract for sale of g/s to customer that are not unilaterally cancellable. (as above)
D.
E.
Eg. Contract to build road * Contract 1 P to M (400 KM) Contract 2 M to J (400 KM)
accounted as single combined contract * Co. has constructed 200 KM of road from P to M, cost incurred 400/- Revenue : Revenue
400 100
Cost 400 125
2 or more contract ++
entered into
Then Combine the contracts, else account separately
a) Single commercial on price / performance of other contract
c) G/s under both contracts form a single P.O.
Change in terms of the contract scope / P.O. or priceQ.
uncertainty of recoverability of amt. from customers is a
Ans. No, it is just a change in
have approved W/O/I
perform it.> Not necessary that the
change in scope/price
should be without any uncertainty
> Facts to be seen to determine whether
Increase in scope and/or price; and
Goods/ Services are
corresponds to
chargeable for the
to reasonable adjustments (Eg. Loyalty discount, Discount against savings of selling cost etc.)
A. Treat it as a separate contract
original contractElse
terms on the date of
a) Measure of pro-gress of P.O. (% of work completed)
-
nised and a) above adjusted P or L
Consider it as
of Old Contract
New Contract
contract
revenue in old contract
+/-
Ind AS 115 : Revenue from Contracts with Customers
Ind AS 115 : Revenue from Contracts with Customers
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1-4-19
1-7-19 There is following change in terms of contract, how will it be dealt.
Contract?
I CA Ltd., now to also to yes verify PPE quarterly @ 1L per quarter (for 3 quarters standalone price also 1L p.q.)
No
No
No
of WC
What if, if price charged was just 50,000 per quarter as a bundled price.
What if the contract was changed to con-tract of PV of FA from PV of stock with revised total price of 15 L
Addln revenue 0.75 L
what if contrach was reduced to 6m from 1 year and total to contract price for 6am to be 7.57
II
III
IV
over 3 quarters
As above Types: PO To transfer a) g/s that are dis-
or
g/s that are
same and have same
Customer can
on its own or with other resources available with customer i.e. g/s generates dis-
that can be used/sold/consumed etc. by customer
Check CONTEXT of the contract as to whether contract is to t/f g/s individually or as a bundled item
Treat the series of g/s to have same
Following factors indicate that g/s are not to be transferred individually
for customersSame
method is used to measure
the progress of
performance
Promise to transfer g/s -
rately under the contract The series of g/s meet the criteria of
single PO given in Para 35
Para 35 Contracts
TIME
Types of PO
emphasises on b) One or more
other g/s
c) G/S are highly interrelated/
interdependent between themselves
3. Contract may have PO; explicit in contract or implied; one or more than one.
& And
CONT RACT
SIGN UP CO
B. 5 Step Model
Ind AS 115 : Revenue from Contracts with Customers
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Input Based Output basedConsistent usage of method
+-
ment of P.O.
required every
yearend.
Change in
Ind AS 8
When
only to the extent of cost.
expects (probable) to cover the costs
Types Common principle
Measurement to be P.O. wise Methods of Measurement Revenue = Cost
T/f means the customers obtains
Similar to as discussed in Ind AS 16a) Substance
over form b) Legal
ownership is indicator of control
c) Ability to di-rect/use the
the asset or right to pre-vent others from using it.
control asset
G/s under the contract will create an asset for the customer i.e. generate economic
customer. Types:
consumed (At consumed 1
Or
Over a period of
Para 35: Prescribes criteria when
the point when control over asset
is transferred
of control”
to demand payment
b) Customer has
rights over asset
c) T/f of posses-sion
indicatorEg. Consignment,
-
of ownershipe) Customer has
accepted the asset
C1 Principle
When customer
simultaneously
consumes
performed
Performance enhances the asset
that customer controls
Performance does not
(seller) but generates -
ment” Seen context of:
Simple basis of
whether right to receive payment is created is
demand payment if customer 3rd party cancels the contract without the fault of
over
cannot reliably measure the progress of
of P.O.
Eg. Based on cost
spent, resources used etc.
Based on outcome of P.O. performed
Ind AS permits SLM
distributed
Based on directly the
value of g/s t/f to customer,
total g/s to be t/f.
Eg. Physical survey, work
milestone achieved,
etc.
Excluding inputs on which no progress is made by
Eg. *Goods supplied under the contract without
* Goods where customer obtains control before any
is made.
Value of g/s on which no performance made is ignored
Output based method is recommend-ed when rev-enue directly related to performance completed.
t/f of g/s to customer under the contract
B. 5 Step Model
Ind AS 115 : Revenue from Contracts with Customers
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upon future event-
Eg.
Eg.4. Expressed or Implied in
contract5. Method to measure VC
1. VC will be considered in
reversal will occur.
reversals
is receivable is highly
giving discounts.d) Contract possible outcomes
Eg. of Constraining Factors Contractor charges 50L for
subject to no seepages. Tr. Price 50L provided 10% is
highly probable to be received, in which 5L is VC
2. In such cases Cash Price to be the Tr.
as interest income (expense) to be
3. D.F. would be computed for unwinding of interest.
charged and Cash Price.-
component considered when:
b) Deferred Credit / Advance is due
usually assumed when:
nature like sales based royalty
reasons.
1. Measured at fair value of
2. If it is not reliably measure-able, standalone price of
considered. In such case FV of
3. Goods/Services Supplied by Customer
B. Principle
Payable by
(against promise) under the contract,
expects to receive, and excludes any amt. received on behalf of 3rd
determined as per contracts terms and
expects to receive is included in Tr. Price
change
variable or both
5. While determining
amount of price recoverable, assuming that contract is not cancelled by
-
(Eg. Cash back Coupons etc.)4. Non-Monetary
3. Financing element
Also treated
received +
receive + expected to return such
remeasured every period end.
mostly only 2 outcome
Most likely outcome
Outcomes Possible
Expected value of VC included in TP Probability weighted value,like Ind AS 37.
*FV of non-monetary
to be ignored unless changes
i.e. variable consid.
Fair value of g/s supplied to be added to Tr. Price
FV of g/s need not be added
price
Whether
(seller) obtains control over such g/s supplied
by customer
No
* What if FV of g/s supplied by customer is not determinable?
contract.* If cons. payable to customer is in other than cash, Its fair
value to be determined, * Cons. payable to customer will be adjusted from Revenue,
later of when:
coupon given for next purchase, however similar
Whether it relates to payments for g/s under a separate contract (if or
Whether amt .paid to customer under separate
of g/s adj. to
Tr. Price
No adj. to
treat it as separate purchase contract
yes
No
B. 5 Step Model
Ind AS 115 : Revenue from Contracts with Customers
CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 7CA FINAL FINANCIAL REPORTING: BY CA SARTHAK JAINBuy Books and Pen Drive Online at www.elearn.fast.edu.in | Contact for Batches at Our Centre in your city 95845 10000 | FAST at 87 Centres across India 7
A. Principle
to
to be such that
represents the amount that the
expects to earn from
transfer g/s
2. Ind AS suggest that standalone price of each P.O. should be the basis of
of TP
part of TP relates
any individual PO it should be allocated to that PO.
Cons. and Discount to be based on
of Ind As115
be used
2. Standalone Price :the P.O. independently / separately
3. Guidelines in determining Standalone Price :a) Price to be based on observable market inputs.List Price
may be used, but it may not always be the fair priceb) When no observable market input to determine the
of the following methods:
1. Applicable : When contract has:
b) Single PO but Vr. Consid. relates to part performance of that single P.O.
2.
that PO
prices
3. Remember! Vr. Cons. is only
to Vr. Cons. as discussed earlier.
Adjusted market price
Price of
similar product
subject to adjustment Used only when :
a) Such g/s sold at highly variable price or
b) Such g/s not sold earlier and its price is
not yet decided
Cost + Margin
Approach
Residual Value approach
TP of PO Whose standalone
be computed as
Price of other PO
price of each PO
Allocated discount to
standalone price unless discount can be specially allocated to a PO. Not a separate contract but
change in Vr. Cons.
will be allocated
Tr. price allocated on DoI
to be based on Tr prices
-
Else
Change in Tr. Price allocate
of standalone price of DoI. (and not date change in TP)
Change in TP
No Whether it is a
Over a period
P.O.
performance
CONTRACT
Eg.
circumtances have changed, etc
B. 5 Step Model
B : 5 Step Model
Ind AS 115 : Revenue from Contracts with Customers
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Cost otherwise incurred
whether or not contract is secured/ obtained
Eg. Non-refundable upfront tender fees
Incremental cost to secure the contract
eg. Agreement charges, Agent
commission payable on successful award
of contract
Such costs which would have been
avoided had contract not been
secured
Cost to be
provided it is probable to be
recovered
Expense to
whether or not contract is secured
C. CONTRACT COSTS
Cost Impairment
consistent with transfer of g/s to customer, to which the asset relates (i.e.
as in Ind AS 8/36
Less : Amt. expected to be recovered; subject to allowance for credit loss, if
Ind AS 36.
Provided it is:a) Probable that it will be
recovered
Andb) it relates to
Andc) enhances an asset or
resource used in -
Nature of Costs
Included Excluded
Eg. DM,DL, Directly
allocatable costs,Cost that can
charged to cus-tomers
Eg.behalf of
recoverable
Cost that would not have been incurred had con-tract not been executed
Eg. Wastages/ Abnormal Costs/PenaltyGeneral Admin
* Costs of
cannot be reocgnised as an asset
* Cost that cannot be allocated be-
PO will also not be added to asset and to be expensed
Apply other Ind AS
Whether contract costs
under any other Ind AS Eg. Ind AS
2, 23, etc.
1) Sale with right to return
3) Principal Vs Agent -
mission-
tomer to acquire
services
unexercised rights
6) Non-refundable upfront fees
7) Licensing
9) Consignment Sales
arrangements11) Customer
acceptance
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1. Sale with Right to Return
Ind AS 115 : Revenue from Contracts with Customers
Do not recognize revenue
separately
b) Depends on
Allocate TP to t/f of g/s and warranty
Accounted like consignment
sales if
be returned
Separate when PO
1. Recognise Revenue
&
2. Provide for refund liabil-
refunds (every year end
&
in value of goods if any (every yr end
Prov. for
warranty
per Ind 37
ElseElse
Inventory with customers will be shown as an
asset
Legal needs
Length of Warranty
Nature of services to be
provided during warranty period
Then as per Ind AS 115 principles
3.Principal Vs Agent
a) Agreement to arrange for g/s
agent.
commission/fees as income
monentarily obtain control over g/s
a) When the agreement is to provide g/s itself.
-enue of price of g/s
c) In an agreement
principal for cer-
for others.d) Control over g/s
is with the principal
-sponsible to perform promise
obsolescence risk, etc.
price at which g/s to be supplied
conrol over g/s before t/f
34800
34800
i) Eg.
available if customer did not enter into the present contract for supply of g/s.
:
of TP: if standalone price is not then the standalone price should
a) Disc. other wise given
Eg.
Ans.
revenue to be recognised ?
also to be considered.Eg.
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7.A * Sales Based Royalty:
dependent on sale/usage of customer then:
and
to undertake Customer directly
not result in t/f of g/s to the customer as and
Part of g/s transferred
(like Caraavan Transistors)
when license is granted
the period of license.
revenue for t/f
of g/s
Eg. that is non-refundable but gives
to/Gold/Prime membership fees, upfront reg. charges of a club, etc.
customer against which customer has
chances of customer exercising the rights.
and it is not refundable by law.
Ind AS 115 : Revenue from Contracts with Customers
Ind AS 115 : Revenue from Contracts with Customers
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Treat as Financial Liability
Treat as
to be adjusted against
over the term
repurchase)*
to repurchase)
Customer has
(Likely to be exercised on DoI)
Op. Lease (Ind AS 17)
In substance, no transfer of control
-
Financing customer will resell
sales with return
Ind AS 109
1 1 Jan Bank A/c Dr. 10,00,000
To FL 10,00,000
2) 31 Dec A) If repurchased: FL Dr. 10,00,000
To Bank 11,00,000
B) If unexercised: Int. Dr. 100,000 To FL 1,00,000
FL Dr. 11,00,000 To Sales 11,00,000
Ind AS (109)
or *Ind AS
(16)
Ind AS (17)
Goods/Service have been t/f load are subject to customer acceptance / approved
If any PO pending like
then T.P. to that extent not
determine t/f of control (based on
acceptance unless acceptance is only a legal formality (based
a) There is no transfer of control over asset hence no revenue to
security deposit
consignment sales:
(i)
legal right over goods
(ii)
call back the goods
(iii) Other party, consignee
pay for the goods.
loose control over g/s
Customer can direct the goods as he wishes i.e.
customer has control over
the goods
reason to hold goods on behalf
of customer
Goods to be use/sell to others goods
that have been billed but not delivered
Criteria to establish t/f of control to
customersubject to any
PO to hold goods.
Eg.as customer is building its body in the yard. Eicher has no more PO pending except delivery of truck to buyer for delivery charges 50,000 included in price above.
Ans. Eicher has t/f control over asset hence revenue can be
when delivered.
Ind AS 115 : Revenue from Contracts with Customers
x
or or
APPENDIX ‘D’: Service Concession Arrangements
contract to build/upgrade an infrastructure along with right to operate it to the operator
-der the contract
2. Scope
infra are not covered
Appendix3. Eg. :
to construct a Tollmotorway and operate it for 5 years from
to collect toll for 5 years
Step I : Determine TP
Step II: infra and
Step III:
Step IV: Contract Asset : Till asset under construc-
-ceivable from the grantor (A/c name
-ery from public using the constructed
infrastructure as it is in nature of
no control over infrastructure.
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Service Concession Arrangement
Step IV : Finance Income
Eg. 1
Soln: Step I : Financial Asset 50 Crores Intangible Asset 150 Crores
Step II :
Step III: 76.67)
motor way.
cost incurred was 30 crores and 60
D.F. 10%
crores.
of road are 50 crores p.a.
1 102.68 10.27 - 112.95 2 112.95 11.30 - 124.25 3 124.25 12.43 50 86.68 4 86.68 8.67 50 45.35 5 45.35 4.65 50 Nil
Finance Income 47.32
Interest Income
Step V
IA FA
FVTPL
also recognised
Ind AS 38A/c under Ind AS 109
FVOCIACM
Ind AS 115 : Revenue from Contracts with Customers
(1) Contract Exp. (PorL) Dr. 30 To Bank 30
(2) Contract Asset Dr. 38.33
(3) Contract Asset Dr. 10.27 +4.13 To Finance Inc. 10.27 +4.13
(1) Tract Exp. (PorL) Dr. 60 To Bank 60
(2) Contract Asset Dr. 76.67
(3) Contract Asset Dr. 4.55 +11.30 To Finance Inc. 4.55 + 11.30
2. Ind AS 23 applies
3. Goods supplied by Grantor : Ind AS 115 provision apply
Journal Entries
* Service Concession Arrangements
Basic Rule :
Costs to obtain/
& Change
Disclosures
included, if any to be presentenly separately
2. Accounted for under Ind AS 109
AS 115 and 109. 4. Tested for impairment under
Ind AS 109
5. Subsequent measurement also as per Ind AS 109
upon something other
Payment received or due but PO pending
Eg.
Ans.
Eg. What if amt. is payable subject
Ans.record contract asset
Eg. Advance received against con-tract Ans. Contract liability
No
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1. disclosed separately
2. • Goods/services• Over / At a point • Fixed / Cost +• Class of customer•
3.
adj. etc. on balances.
of PO
Over a period When t/f of control over
etc.
Op, Cl.,
and Impairment
Eg. associated PO, is payable but not yet
Ans. To Contract Liability
4. PO When recog. (Policy)
beg. of year from which Ind AS 115 adopted i.e 1.4.18 (no p.y.
Adj. done thru Op. reserves.
completed contracts
+
(known as contract is now completed)
Ind AS 115 : Revenue from Contracts with Customers
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
Ind AS 115 : Revenue from Contracts with Customers
OVER VIEW
A
C
D
E
F
B
recognizing &
B
E
F
C
A
D
B. 5 Step Model recognizing & measuring revenue
Legend for Ind AS 115
Revenue
Step I Step IVStep IIIStep II Step V
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C1
C2
C3
C. Contract Cost
Special Topics (Appendix to Ind AS)
Cost Inclusion & Exclusion
Appendix C
SCA
Appendix B Appendix D
to Ind AS 115
PO :
t/f : g/s:
Rev. Vr. Cons. :
w/o:
CF : Tr.Pr. : CWC :
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