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Welcoming the New Revenue Recognition Standard: Ind as 115 Revenue from Contracts with Customers

Welcoming the New Revenue Recognition Standard: Ind as 115 Revenue from Contracts with Customers

          
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About the Book

Indian companies would truly become global players when they adopt the new revenue recognition standard - Ind AS 115. The New Revenue Recognition Standard is bold standard, which gives top-lines of companies, across industries, a common denominator. It is a ground-breaking shift from the fair value basis of measuring revenue, to one which takes into account what consideration the entity really expects to be entitled to receive from the contract with a 'customer'. Moreover, the terms 'client' and 'customer' would no longer be fungible.Ind AS 115 applies to entities falling within the Ind AS roadmap or voluntarily adopting Ind AS and is effective from accounting periods beginning on or after April 1, 2018. Its US counterpart, ASC 606 provides guidance that will apply to all entities, including non-public entities that previously did not have extensive guidance. IFRS differs in this respect as IFRS for Small and Medium-sized Entities is available for entities that do not have public accountability.The new standard broadens the definition of revenue to include newer concepts like costs to obtain and fulfil a contract and material rights. The revenue is recognised upon control transfer rather than on delivery/ transfer of risks and rewards and the standard introduces the concept of 'control transferred at a point in time' and 'control transferred over time'. The standard requires management to increase exercise of judgment and estimate variable consideration, after applying constraints. The disposal of an item of property, plant and equipment or an intangible asset also is recognised when the recipient obtains control of it. Control is determined as per under Ind AS 115.The new revenue recognition standard affects more than just revenue and impacts the business processes and results in dual testing of Internal Financial Controls (other than by a 'one person' company or 'small' company) during the transition phase. Moreover, the standard was notified on March 28, 2018 and hence managements following Ind AS would need to disclose the impact Ind AS 115 in the March 31, 2018 financial statements as the standard was issued but not yet effective as at the end of the financial year.Managements are encouraged to take a tax health check in the end but keep financial statements free of bias. With sufficient discussions and training, all managements will be able to do the 'heavy lifting'.


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Product Details
  • ISBN-13: 9781717932075
  • Publisher: Independently Published
  • Publisher Imprint: Independently Published
  • ISBN-10: 171793207X
  • Publisher Date: 06 Aug 2018


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Welcoming the New Revenue Recognition Standard: Ind as 115 Revenue from Contracts with Customers
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