Revenue Recognition AS 9

REVENUE RECOGNITION (AS  – 9)

 

gross inflow of consideration arising in the course of ordinary activities, such as:

 

 

a.  Sale of goods.

 

b.  Rendering the services.

c.  Use of the enterprises resources by others giving interest, dividend and royalties.

 

2.  RfeargovloeoemdnosufS:e

 

a.  Revenue  is recognised:

i.    When sale is completed. (Refer to next point)

 

ii.  When certainty exists regarding amount of consideration.

iii. When certainty exists regarding collection of consideration.

 

b.  Sale is completed, if:

i.    The ownership in goods is transferred for a price Or

ii.  All significant risks & rewards have been transferred and no effective control is retained.

 

3.  Rfedrgveosesmren:irnuvreiecn

 

a.  Completed service  method  (CSM):

i.    To be recognised only when rendering of services is fully or substantially completed.

 

ii.  More than one act is involved, revenue to be recognised on execution of all those acts.

 

b.  Proportionate completion method  (PCM): Recognise revenue proportionately with the degree of completion of services. (Similar to AS -7)

c.  Revenue  on rendering  of services  is recognised:

 

i.    Either under CSM Or PCM.

 

ii.  Only when certainty exists regarding amount of consideration.

 

iii. Only when certainty exists regarding collection of consideration.

 

4.  Tgeuoigmvenfne:iinRtieoco

 

a. Revenue from sale or rendering services should be recognised at the time of the sale or rendering services.

 

b. However, if at the time of sale or rendering services there is significant uncertainty in collection of the revenue, then the revenue recognition is to be postponed.

 

c. In such cases it will be recognised only when it becomes certain that collection will be made.

 

 

5.  Wdvhieesdylrnaeieytldaqueterhb&’sdesuat):lherso(esBl ill

recognised.

 

6.  Rceihteovsidgnsuoesnsbnngioujsowele:ocdtReto  conditio

 

Revenue should be

 

 

a. Installation: Revenue to be recognised when goods are installed and accepted by the buyer.

 

b. Sale on approval: When buyer confirms his desire to buy the goods.

 

c. Warranty  Sales/Money  back sales: Recognise revenue immediately but a provision for warranties/returns to be made.

 

d. Consignment  sales:  Revenue  to  be  recognised  only  when  the  goods  are  sold  by consignee.

 

e. Subscriptions  for publication: If publications to be delivered vary in value from period to period  revenue  should be  recognised  on the  basis  of sales  value  of items  to be delivered. If not, revenue should be recognised on straight-line basis over the time.

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