Ind-AS 115

:#
÷ “Revenue from Contract with Customers”
1) Scope of Ind AS 115:
Ind AS 115 applies to all contracts with customers to provide goods or
services that are outputs of the entity’s ordinary course of business in
exchange for consideration.
An entity shall apply this Standard to all contracts with customers, except
the following:
(a) lease contracts within the scope of Ind AS 116, Leases;
(b) insurance contracts within the scope of Ind AS 104, Insurance Contracts
(c) financial instruments and other contractual rights or obligations within
the scope of Ind AS 109, Financial Instruments, Ind AS 110, Consolidated
Financial Statements, Ind AS 111, Joint Arrangements, Ind AS 27,
Separate Financial Statements and Ind AS 28, Investments in Associates
and Joint Ventures; and
(d) non-monetary exchanges between entities in the same line of business
to facilitate sales to customers or potential customers.

2) Core principle of Revenue Recognition: [ learn]

Ind AS 115 is based on a core principle that requires an entity to recognize
revenue:
Timing (a) In a manner that depicts the transfer of goods or services to customers
Am% (b) At an amount that reflects the consideration the entity expects to be
entitled to in exchange for those goods or services.

Theory Practical Practical Practical

Theory

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
Step 1: Identify Contract with customer: 105,6
Ind AS 115 requires an entity to account for a contract with a customer
that is within the scope of the model in this standard only when all the
following criteria are met:

µ ,www..am, , ,, , mum, , ,, µ,,

Recognise
Revenue
are;÷¥÷a
.

Note:
1) Contract Term: 101.21
It is the period over which parties in the contract have enforceable rights
and obligations. Gym subscription -712 month .

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
2) Combining Contracts: 10314,82
Two or more contracts may need to be accounted for as a single contract if
they are entered into at or near the same time with the same customer (or
with related parties of the customer), and if one of the following conditions
exists:

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
+

Step 2: Identify Performance Obligations: 107,8 9.10.11.1213 .

-14,159,102,8£
Performance obligations has been defined as a promise in a contract with a83
customer to transfer to the customer either:

I(a) good or service (or a bundle of goods or services) that is distinct; or

(b) a series of distinct goods or services that are substantially the same
and that have the same pattern of transfer to the customer. F-
g. Newspaper
subscription ,

cable services
Distinct Goods or Services: Imp:

Internet Service
provider
a) Broadband service
1
b) Mother

SA:P Navin classes

→ a) Software
→
b) Customisation ②
c) Technical support
→

→ d) Updates ②

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”

tmp Step 3: Determining Transaction Price:

The transaction price is the amount of consideration to which an entity
expects to be entitled in exchange for transferring promised goods or
services to a customer, excluding amounts collected on behalf of third
parties (for example, some sales taxes).
The consideration promised in a contract with a customer may include fixed
amounts, variable amounts, or both.
When determining the transaction price, an entity shall consider the effects
of all of the following:

Transaction Price : .

fixed consideration Included

(1) =)
Always
121 Variable u =) Included at an estimated amt
if it is not
( including sale with
right constrained
torewnn )
131 Nonlmh n
=) Always included at FV
of consideration oecd
(4)
Significant Financing Components Adjusted to transaction
price
(5) Consideration payable to custom :) Adjusted to transaction price

(6) Warranty =) Assurance warranty inherent to

product notaseperahep.co
→

to be
service in
=) Separate Pod recognised
separately as revenue
Financial Reporting 76 CA Avinash Sancheti
 Ind-AS 115
“Revenue from Contract with Customers”
¥ (1) Variable Consideration: ( 02*0,23/24,2*5,219,22 ,
/
07.97.87.51
Variable consideration is the consideration which may vary based on
happening or non-happening of certain future events. Variable consideration
can be positive like incentive, performance bonus etc. or negative like
penalty or refunds etc.
If the consideration promised in a contract includes a variable amount, an
entity shall estimate the amount of consideration to which the entity will
be entitled in exchange for transferring the promised goods or services to
a customer.
Estimating variable consideration

Expected value Most likely value

method method
tr a
sum
of Probability single most
likely
weighted amounts amount
of consideration
& I

Applied when there are suitable if contract

more than 2 outcomes has
exactly 2
possible
outcomes

Constraints on Variable Consideration:

An entity shall include in the transaction price some or all of an amount of
variable consideration only to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not
occur when the uncertainty associated with the variable consideration is
subsequently resolved.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
Factors that could increase the likelihood or the magnitude of a revenue
reversal include, but are not limited to, any of the following:
a) Limited experience of the entity;

¥ Yoni
able

b) Period after which uncertainty will be resolved is very long; consideration

is
c) Consideration is dependent on factors outside the entity’s control. constrained
d) the contract has a large number and broad range of possible so don't
include
consideration amounts. it in tram .

price .

Reassessment of Variable Consideration:

At each balance sheet, date, the entity should reassess the variable
consideration and update the transaction price if required. The change
should be accounted for on cumulative catchup basis.
d
Revenue to be changed
recognised as
per assessment
=
XXX

,¥
e) Revenue already recognised =

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
(2) Non Cash Consideration: 1038,39 40,93 , 92,91 ,

Lacks commercial substance Has commercial substance

d d
Entities in the same Include such consideration in
business, exchanging transaction price:
same goods or services 1) at Fair value of such non
tr Pref -1 Cash consideration;
No Revenue recognition 2) if fair value cannot be
readily determined, then take
Pref -2
standalone selling prices of the
goods or services given up.

None !
.
Changes in fair value
of non -
con h consideration shall not
affect
Revenue .

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”

1mA
'

(3) Significant Financing Component: 1029,3*0,3*1 ,

36.90.89.79
In determining the transaction price, an entity shall adjust the promised
amount of consideration for the effects of the time value of money if the
timing of payments agreed to by the parties to the contract provides the
customer or the entity with a significant benefit of financing the transfer
of goods or services to the customer.
It is generally the case when the significant amount of consideration is
paid before or after 12 months of discharging performance obligation.
This can be evidenced by looking at:
a. The difference between Cash selling price and promised consideration,
and
b. Length of time between discharge of obligation and payment of
consideration.
When a significant financing component exists in a contract, the transaction
price is adjusted so that the amount recognized as revenue is the ‘cash
selling price’ of the underlying goods or services at the time of transfer.
Essentially, a contract with a customer that has a significant financing
component would be separated into a revenue component (for the notional
cash sales price) and a loan component (for the effect of the deferred or
advance payment terms).

Discount Rate: V. Imp .

(1) Rate if a separate Financing transaction was done; / Incremental Boro

.

(2) If above Rate is not available, then IRR. owing rate)

Reverse order
of Ind As 116

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
Exception: limp ) 103233,34
A contract with a customer would not have a significant financing
component if any of the following factors exist:
(a) the customer paid for the goods or services in advance and the timing
of the transfer of those goods or services is at the discretion of the
customer. For example, consider a prepaid card for mobile phone services,
wherein the customer has the discretion to avail mobile services within a
certain band of time.
(b) a substantial amount of the consideration promised by the customer
is variable and the amount or timing of that consideration varies on the
basis of the occurrence or non-occurrence of a future event that is not
substantially within the control of the customer or the entity (for
example, if the consideration is a sales-based royalty).
(c) the difference between the promised consideration and the cash
selling price of the goods or service arises for reasons other than the
provision of finance to either the customer or the entity, and the
difference between those amounts is proportional to the reason for
the difference. (Eg. upfront payment for low rated customers, delayed
payment for performance guarantee in complex projects.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
(4) Consideration payable to customer: -041,42 52,53 ,

The rationale behind the accounting provisions related to “consideration

payable to a customer” is that an entity should not overstate its revenue
by amounts given to customers in a contract that it will receive back
through the purchase of its goods or services.

Consideration payable to a customer includes cash amounts that an

entity pays, or expects to pay, to the customer. Consideration payable
to a customer also includes credit or other items (for example, a
coupon or voucher) that can be applied against amounts owed to the
entity.
Accounting:

Consideration payable
to customer

d d
for distinct Goods
/ service otherwise
d d

Recognise man expense Redvietheamt

paid from
dnotadj.to/-ramach'0npnie transaction
& price
.

However, ifamtpaidyfvofawds/ services ,

even shall be reduced

Financial Reporting 76 from
tram .
CA Avinash Sancheti
price
 Ind-AS 115
“Revenue from Contract with Customers”
(5) Special Cases:
-

1) Sale with Right to return: 10105,88 ,

26

In some contracts, an entity transfers control of a product to a customer

and also grants the customer the right to return the product for various
reasons (such as dissatisfaction with the product) and receive any
combination of the following:
(a) a full or partial refund of any consideration paid;
(b) a credit that can be applied against amounts owed, or that will be
owed, to the entity; and
(c) another product in exchange.

Accounting:
1) Recognise revenue to the extent the entity expects to be entitled to
✓
the consideration. Entity does not expect to get consideration for the
goods which would be returned, and hence the revenue for such goods will
not be recognised.

2) Recognise a refund liability for consideration received on goods which are

: expected to be returned.

3) Recognise an asset for the rights that an entity possesses to recover

products from its customer with corresponding adjustment to cost of sales.

4) If restocking fee is charged to the customer on the products returned,

✓
the refund liability will be recorded net of the restocking fee and income
for restocking fee can be recorded separately.

immediately

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
2) Warranties: ( 027,28

service warranty Assurance warranty

d d
•
2 Pos : .
•
Revenue shall be
recognised
(a) tho duct for full amt as assurance

is not
(b)warranty service warranty a
separate
f. 0 .

•
Transaction
price shall be •
Prov .

for warranty shall

be created
allocated btw the 2 P' 0s .

for expected costs

that lo may have to incur
.
.

•
Revenue from sale of prod .

shall be recog when control .

is
tofd .
Revenue related
to
warranty service recognised
over the warranty period .

•
No Pwr for warranty
.

req .

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
"

Step 4: Allocation of Transaction Price to P.Os.: 1043,444%46,108,1*00,98

1) Allocation Objective:
While allocating the transaction price, the objective of the entity should be
to allocate the transaction price to each performance obligation (or distinct
goods or service) in an amount that depicts the amount of consideration to
which the entity expects to be entitled in exchange for transferring the
promised goods or services to the customer.

2) Allocation Rule:
To meet the above allocation objective, an entity shall allocate the
transaction price to each performance obligation identified in the contract
on a relative stand-alone selling price basis as per the standard, except for
allocating discounts and for allocating consideration that includes variable
amounts.

3) Standalone Selling Price:

The stand-alone selling price is the price at which an entity would sell a
promised goods or service separately to a customer.
Standalone selling price

1st Pref .
( Altvalssp ) 2nd pref .
(Estimated SSD
Observable selling price Other methods (if
of Standalone goods/ no SSP observable)
service
-

Adjusted Market Cost plus Residual

assessment Approach margin Approach Approach

Competitor 's observable cost

plvsappnop .

s.s.pt
Adjustment margin
Financial Reporting 76 CA Avinash Sancheti
 Ind-AS 115
“Revenue from Contract with Customers”
Note on Residual Approach:
"
1) Under Residual Approach, SSP of the P.O. will be Total Transaction Price
less Sum of observable S.S.Ps of Other obligation." (Bal figure ]
-

2) This Approach is suitable only if:

a) The Entity has a very broad range of S.S.Ps for the same product, or
b) The Entity has never sold the goods on a S.S.P.

3) An Entity souls allocate Discount before using this approach to each S.S.P.

4) The value derived under the residual approach should be within the
broad range of standalone selling prices for that product, if it is outside
the range, then the residual approach is not suitable and an alternative
approach needs to be applied.

0¥ 4) Allocation of Discount:
A customer receives a discount for purchasing a bundle of goods or
services if the sum of the stand-alone selling prices of those promised
goods or services in the contract exceeds the promised consideration in
a contract.
Unless an entity has observable evidence that the entire discount relates to
only one or more, but not all, performance obligations in a contract, the
entity shall allocate a discount proportionately to all performance obligations
in the contract.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
An entity shall allocate a discount entirely to one or more, but not all,
¥performance obligations in the contract if all of the following criteria
are met:
(a) the entity regularly sells each distinct goods or service (or each bundle
of distinct goods or services) in the contract on a stand-alone basis;
(b) the entity also regularly sells on a stand-alone basis a bundle (or
bundles) of some of those distinct goods or services at a discount to the
stand-alone selling prices of the goods or services in each bundle; and
(c) the discount attributable to each bundle of goods or services described
in (b) above is substantially the same as the discount in the contract.

5) Allocation of Variable consideration: Iou:I

It should be allocated to the specific performance obligation to which it
pertains. The above allocation should fairly represent the consideration
that an entity expects from each performance obligation. If allocation
does not fairly represent the consideration expected, then the entire
consideration should be allocated proportionately.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers” Different type
$ /
5) Customer’s option for additional goods: 1048,4*7*199.99
Retail and consumer products entities frequently give certain customers
the option to purchase additional goods or services. These options come
in many forms, including sales incentives (e.g., coupons with a limited
distribution, competitor price matching programs aimed at only some
customers, gift cards issued by a retailer as a promotion) and customer
award credits (e.g., loyalty or reward programs).

The standard states that when an entity grants a customer the option to
acquire additional goods or services, that option is only a separate
performance obligation if it provides a material right to the customer. The
right is material if it results in a discount that the customer would not
receive without entering into the contract

If the option provides a material right to the customer, the customer in

effect pays the entity in advance for future goods or services and the
entity recognizes revenue when those future goods or services are
transferred or when the option expires.

This standard requires an entity to allocate the transaction price to

performance obligations on a relative stand-alone selling price basis. If
the stand-alone selling price for a customer’s option to acquire additional
goods or services is not directly observable, an entity shall estimate it.
That estimate shall reflect the discount that the customer would obtain
when exercising the option, adjusted for both of the following:
(a) any discount that the customer could receive without exercising the
option; and
(b) the likelihood that the option will be exercised.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
Step 5: Recognition of Revenue:
1) Satisfaction of P.O.:
An entity shall recognize revenue when (or as) the entity satisfies a
performance obligation by transferring a promised goods or service (i.e. an
asset) to a customer. An asset is transferred when (or as) the customer
obtains control of that asset.

Control of an asset refers to: ( same as Ind As 116 ]

(i) the ability to direct the use of, and obtain substantially all of the
remaining benefits from the asset.
(ii) Control includes the ability to prevent other entities from directing the
use of, and obtaining the benefits from, an asset.

The standard indicates that an entity must determine, at contract inception,

whether it will transfer control of a promised goods or service over time.
If an entity does not satisfy a performance obligation over time, the
performance obligation is satisfied at a point in time.
Ind AS 115

d b
Ao is
☒$ P.o.is satisfied over satisfied at
a
period of time a
point in time
3 conditions
dlanyofthe3londih.com) d(none of the
satisfied)
revenue bared
Recognise Recognise revenue at

on :/
the
of work completed point when
goods
"

(Percentage completion method) or services are

provided .

Financial Reporting CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”

§ 2) Transfer of Control over a period of time: 1054,55 56.57.5859 , 61,66)

,

An entity transfers control of a goods or service over time and, therefore,

satisfies a performance obligation and recognizes revenue over time, if any
of the following criteria is met:
Criteria (a) – The customer simultaneously receives and consumes the
benefits provided by the entity's performance as the entity performs; or
Criteria (b) – the entity's performance creates or enhances an asset (for
example, work in progress) that the customer controls as the asset is
created or enhanced; or f- customer 's land
g. Construction on

Criteria (c) – the entity's performance does not create an asset with an
alternative use to the entity and the entity has an enforceable right to
payment for performance completed to date.

3) Transfer of Control at a point in time:

Where a company does not meet any of the aforementioned criteria for
recognizing revenue over a period of time, then revenue shall be recognized
at a point in time.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
3) Transfer of Control at a point in time:
Where a company does not meet any of the aforementioned criteria for
recognizing revenue over a period of time, then revenue shall be recognized
at a point in time.

4) Revenue Recognition:
A) P.O satisfied over time:

Measurement of Progress of work

"

Degree of completion
of
work
"

Output based method 1066 ) Input based method

0!
A. ☒

recognize revenue on the basis of Input methods recognize revenue on

direct measurements of the value, the basis of the entity’s efforts or
to the customer, of the goods or inputs to the satisfaction of a
services transferred to date relative performance obligation relative to
to the remaining goods or services the total expected inputs to the
promised under the contract. satisfaction of that performance
(e.g. based on surveys/appraisals, obligation.
milestones achieved) (e.g. resources consumed, labour
hours expended, costs incurred,
time elapsed or machine hours used)
*
Note for Output method:
a) Exclude Abnormal losses from the cost incurred as they don’t contribute
in satisfying P.O
b) In case of unused materials, we will only include cost of materials used
till date to measure stage of completion.
c) If costs are incurred evenly, we can use SLM.

Financial Reporting 76 CA Avinash Sancheti

 lost to lost
Ind-AS 115
input method
“Revenue from Contract with Customers” ( 060,101,949
¥ d)its When cost incurred is not proportionate to entity’s progress in satisfying
performance obligation. In such cases, the best reflection is to adjust
v.vn# the input method to recognize revenue only to the extent of costs
incurred. Such recognition of revenue to the extent of costs incurred is
appropriate, if at contract inception, all the following conditions exist:
(i) The goods do not represent a distinct performance obligation;
(ii) Customer is expected to obtain control of the goods significantly before
receiving the services;
(iii) Cost of such goods is significant relative to the total expected costs to
complete the performance obligation; and
(iv) The entity procures the goods from a third party and does not
significantly involve in designing / manufacturing the goods (even if the
entity is a principal in the arrangement between the entity and end
customer).
* for
output based method :

11065)
contract WIP = Total cost Inc .
t) lost to be
recognised as exp .

(Est .
Total cost ✗ DO C)

* Amt due to
/ from customer : -

Revenue recognised
= ✗ ✗✗

Progress billings done d

collected ( ✗ Xx)
ant =

Due from /
customer (Due to customer )×¥

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
3) Special Cases:
(A) Sale and Re-Purchase agreements: 1062,63)
A repurchase agreement is a contract in which an entity sells an asset and
also promises or has the option (either in the same contract or in another
contract) to repurchase the asset.

Re-purchase
(Forward/Call/Put)

Repurchase price > Sales price Repurchase price < Sales price
510 500 480 500

Financing Lease

Bank Afc Mr .
Bank Afc -
Dr
.

To loan Afc To
Security Deposit A/c
(Revenue is not recognised ] to Unearned Leone
Rent All
-1 Revenue is not
recognised ]
Important notes:
a) The above treatment would be done for options only if the entity

:
estimates at the inception that there is a significant economic incentive to
exercise. The economic incentive should be evaluated from the option
holder perspective by comparing the re-purchase price with the expected
market price.
b) In case of options, which do not get exercised, we would reverse the
liability and credit revenue.
c) Finance Cost/lease income will get recorded over the tenure of the
✓
contract.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
(B) Bill and Hold Arrangements: ( 064,102)
A bill-and-hold arrangement is a contract under which an entity bills a
customer for a product but the entity retains physical possession of the
product until it is transferred to the customer at a point in time in the
future. For example, a customer may request an entity to enter into such a
contract because of the customer's lack of available space for the product
or because of delays in the customer's production schedules.
In such arrangements, the entity shall determine at which point does
control transfer to the customer.
In some cases, control is transferred either when the product is delivered
to the customer’s site or when the product is shipped, depending on the
terms of the contract.
While in other cases, a customer may obtain control of a product even
though that product remains in an entity’s physical possession.
In that case, the customer has the ability to direct the use of, and
obtain substantially all of the remaining benefits from, the product even
though it has decided not to exercise its right to take physical possession
of that product. Consequently, the entity does not control the product.
Instead, the entity provides custodial services to the customer over the
customer’s asset.
In addition, for a customer to have obtained control of a product, all of
the following criteria must be met:
(a) the reason for the bill-and-hold arrangement must be substantive (for
example, the customer has requested the arrangement);
(b) the product must be identified separately as belonging to the customer;
(c) the product currently must be ready for physical transfer to the
customer; and
(d) the entity cannot have the ability to use the product or to direct it to
another customer.

76 CA Avinash Sancheti
 Ind-AS 115
“Revenue from Contract with Customers”
Where an entity recognizes revenue on bill & hold basis, the entity shall
determine if it has any additional performance obligations forming part of
the transaction price, which would need to be segregated and accounted
separately, when such performance obligations are met. (for eg.: custodial
services for goods held, extended warranty, etc.)

☒ (C) Principal vs. Agent Consideration: 1017116118,109 )

Some contracts result in an entity’s customer receiving goods or services
from another entity that is not a direct party to the contract with the
customer. The standard states that when other parties are involved in
providing goods or services to an entity’s customer, the entity must
determine whether its performance obligation is to provide the goods or
service itself (i.e., the entity is a principal) or to arrange for another
party to provide the goods or service (i.e., the entity is an agent).

The determination of whether the entity is acting as a principal, or an

agent affects the amount of revenue the entity recognizes. That is,
a) when the entity is the principal in the arrangement, the revenue
recognized is the gross amount to which the entity expects to be entitled.
b) when the entity is acting as an agent, the revenue recognized is the net
amount i.e. the amount, entity is entitled to retain in return for its services
under the contract.

Indicators that an entity is a principal (and therefore controls the goods

or service before it is provided to a customer) include the following:
(a) the entity is primarily responsible for fulfilling the contract. This
typically includes responsibility for the acceptability of the specified
goods or service; { main consideration }
(b) the entity has inventory risk before the specified good or service
has been transferred to a customer or after transfer of control to the
customer (for example, if the customer has a right of return).

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
(c) the entity has discretion in establishing prices for the goods or services.

(D) Upfront Non-refundable fees: (086)

Examples include joining fees in health club membership, activation fees
for telecom services, setup fees in certain service contracts and initial fees
or joining fees in some supply contracts with the distributors or customers.

☒ (E) License of Intellectual Property: (068,6917-0,7-1,67)

Ind AS 115 provides application guidance specific to the recognition of
revenue for licences of intellectual property, which differs from the
recognition model for other promised goods and services.
A licence will either provide:
1) a right to access the entity’s intellectual property throughout the
licence period, which results in revenue that is recognized over time; or
2) a right to use the entity’s intellectual property as it exists at the point
in time in which the licence is granted, which results in revenue that is
recognized at a point in time.

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”

Note: Mere advertising/routine updates does not make the IP dynamic.

(F) Service Concession Arrangements: 1072

Service Concession Arrangement involves a private sector entity (an
operator) constructing the infrastructure used to provide the public service
or upgrading it (for example, by increasing its capacity) and operating and
maintaining that infrastructure for a specified period of time. The operator
is paid for its services over the period of the arrangement.
Infrastructure shall not be recognized as property, plant and equipment
of the operator because the contractual service arrangement does not
convey the right to control the use of the public service infrastructure to
the operator.
Treatment of consideration received

Unconditional right Right to operate

to receive cash & collect toll
d t

Recognise a financial Asset

1 Debtor )
Recognise an
Intangible Asset

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
4) Contract Modifications: (073,747-5,80194106)

M :&
(

modification
d d

separate contract
modif of existing
-
contract

d w

if 2condih.com are otherwise

satisfied
a.
Termination
of old contract cumulative

dating as a new contract catchvpadj

d d

Remaining Goods or services

Remaining goods
distinct
from Goods or services are
are
nor distinct
or services already poor

Financial Reporting 76 CA Avinash Sancheti

 Ind-AS 115
“Revenue from Contract with Customers”
5) Contract Costs: ( I 77,78 10 )

✓
through
ap margin

Note:
1) Under Ind AS 115, an entity amortises capitalised contract costs on a
✓
systematic basis consistent with the pattern of transferring the goods or
services related to those costs. If an entity identifies a significant change
to the expected pattern of transfer, it updates its amortisation to reflect
that change in estimate in accordance with Ind AS 8.

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2) The test to determine if a cost is incremental is to ask whether the entity
would have incurred the cost had one or both of the parties decided to
walk away just before signing the arrangement.
3) Capitalisation and deferral of contract acquisition and fulfilment cost
needs to be done only if the contract term is greater than 12 months.
d
Financial Reporting 76 Prach¥fedie¥ CA Avinash Sancheti