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AS - 9 Revenue Recognition: Ashish Makhija Aicwa, LL.B., Fca

This document discusses various Indian Accounting Standards (AS) related to revenue recognition (AS-9), accounting for fixed assets (AS-10), accounting for government grants (AS-12), accounting for investments (AS-13), accounting for amalgamations (AS-14), and accounting for retirement benefits (AS-15). It provides objectives, scope, definitions, accounting treatments, disclosure requirements and special considerations for each standard.

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22 views

AS - 9 Revenue Recognition: Ashish Makhija Aicwa, LL.B., Fca

This document discusses various Indian Accounting Standards (AS) related to revenue recognition (AS-9), accounting for fixed assets (AS-10), accounting for government grants (AS-12), accounting for investments (AS-13), accounting for amalgamations (AS-14), and accounting for retirement benefits (AS-15). It provides objectives, scope, definitions, accounting treatments, disclosure requirements and special considerations for each standard.

Uploaded by

Naina Tak
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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AS – 9

Revenue Recognition
ASHISH MAKHIJA
AICWA, LL.B., FCA
Objective
 Basis of revenue recognition
 Arising in the ordinary course of activities
 Revenue arising from
 Sale of goods
 Services
 Interests, Royalties & Dividends
 Revenue – Gross Inflow of cash,
receivables or other consideration
Applicability
Does not apply to revenue arising from –

- Construction Contracts (AS - 7)


- Hire Purchase & Leases (AS – 19)
- Government Grants (AS – 12)
- Insurance Contracts
What is not Revenue as per AS-9?
Realised Gains Unrealised gains
Disposal of non-current Holding of non-current
assets assets
Natural increase in Change in value of
herds, agriculture & current assets
forest products
Changes in Foreign Changes in Foreign
Exchange Rates Exchange Rates
Discharge of obligation Restatement of carrying
at lesser value amount of obligation
Sale of Goods
Transfer of property in goods or transfer of
significant risks and rewards of ownership
to the buyer
and
Non-existence of significant uncertainty
regarding amount of consideration
and
Not unreasonable to expect ultimate
collection
Rendering of service
To be measured using either completed
service contract method or proportionate
completion method
and
Non-existence of significant uncertainty
regarding amount of consideration
and
Not unreasonable to expect ultimate
collection
Interest, Royalty & Dividend
Non-existence of Interest -Time
significant - Rate
uncertainty as to - Amount
measurability or Royalty - Accrual
collectability
- Agreement
Dividend Right to
receive is
established
Disclosure

 Accounting Policy as per AS 1

 If recognition is postponed,
circumstances leading to
postponement to be disclosed
AS – 10
Accounting for Fixed Assets
Scope
 Applies to financial statements
prepared on historical cost basis
 Dose not deal with
 Forests, plantations and other
regenerative natural resources
 Mineral rights, exploration of oil, gas and
other non-regenerative resources
 Expenditure on real estate
developments
 livestock
What is a Fixed Asset?
 An asset
 Held with the intention of being used
for the purpose of producing goods or
providing services
 Not held for sale in the normal course
of business
What is Cost?
 Purchase Price
 Includes import duties, taxes &
levies
 Directly attributable cost of
bringing the asset in working
condition for its intended use
Special Cases
 Self constructed fixed assets
 Non-monetary consideration
 Subsequent improvements
 Retirements & Disposals
 Goodwill
 Revaluation
Disclosure
 Gross Value at beginning and at end
 Net Value at beginning and at end
 Additions, Disposals, Acquisitions & other
movements
 Expenditure incurred in the course of
construction and acquisition
 Revalued Amounts, Method of
Revaluation, nature of Indices etc.
AS- 12

Accounting for Government


Grants
Scope
 Deals with Government Grants
(Subsidies, cash incentives, duty
drawbacks etc.)
 Does not deal with
 Government assistance other than in
form of government grant
 Government participation in the
ownership of eneterprise
Government Grant?

 Assistance by Government
 In cash or in kind
 For past or future
compliance with certain
conditions
Accounting Treatment

Capital Approach

Income Approach
Recognition of Government Grants

 Compliance with conditions


 Certainty as to ultimate
collection
 Mere receipt is not conclusive
evidence
Special Cases
 Non-monetary Government Grants
 Grants related to Specific Fixed
Assets
 Grants related to revenue
 Grants of the nature of Promoter’s
contribution
 Refund of Government Grants
Disclosure
 Accounting policy adopted including
method of presentation
 Nature & extent of government grants of
non-monetary assets given at
concessional rate or free of cost
AS-13
Accounting for
Investments
Scope
 Investments – Accounting & Disclosure
 Dose not deal with
 Bases for recognition of interest, dividend &
rentals
 Operating or financial leases
 Investment of retirement benefit plans & life
insurance enterprises
 Mutual funds and venture capital funds,
AMC’s, Banks or Financial Institutions
Investment

 Asset held for


 Earning income
 Capital appreciation
 Other benefits
Classification of Investment

Current Investment
Long term Investment
Investment Properties
Cost of Investment

 To include acquisition charge


 Acquired by issue of shares
 Acquired in Exchange
Carrying Cost of Investments
 Current Investments
 Lower of cost and fair value
 Long term Investments
 At cost less permanent diminution
in value of investment
Disposal of Investments

Difference between
carrying amount and net
disposal proceeds to be
charged or credited to
profit & loss account
Disclosure
 Accounting Policy for determination of
carrying amount
 Classification of investments
 Income earned from investments, profit &
loss from disposal
 Significant restrictions on the right of
ownership, realisability and remittance
 Aggregate amount of quoted and
unquoted investments
AS-14
Accounting for
Amalgamations
Types of Amalgamations

 In the nature of Merger


 In the nature of Purchase
Method of Accounting
 Pooling of Interest method
 Assets, liabilities & reserves of the transferor
company are recorded by the transferee
company at their existing carrying amounts
 Purchase method
 Assets and liabilities are recorded at their
existing carrying amounts or allocating the
consideration to individual assets on the basis
of fair value at the date of amalgamation
Issues
 Consideration
 Treatment of Reserves
 Treatment of Goodwill
 Balance of Profit & Loss A/c
Disclosure
 Names & business of amalgamating
companies
 Effective date of amalgamation
 Method of accounting
 Particulars of sanctioned scheme
 Description and No. of shares issued
 Consideration – Paid or Payable
Special Issue

 Amalgamation after Balance


Sheet Date
 Disclosure to be made
 Amalgamation not to be
incorporated
AS – 15
Accounting for Retirement
Benefits
Retirement Benefits
 Provident Fund
 Superannuation/Pension
 Gratuity
 Leave Encashment
 Post retirement health and welfare
schemes
Accounting
 Provident Fund & other defined
contribution schemes
 Gratuity benefit and other defined
benefit schemes
 Actuarial Principles
Disclosure

 Method of Accounting
 Actuarial Valuation made at
the end of the year or earlier
Thank You

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