iv) Customer's acceptance Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. If the remaining goods or services are not distinct and are part of a single performance obligation that is partially satisfied, entity should adjust both transaction price and measure of progress towards completion. However, an entity would allocate a discount to only some of the performance obligations only if it has observable evidence of the obligations to which the entire discount belongs. ï¿½ Parties have approved the contract and are committed to perform their respective obligations, i) Each party's rights real estate infrastructure, EPC (Engineering, Procurement and Construction), IT services, etc. To estimate the transaction price in a contract that includes variable consideration, entity may use any of two methods: An entity should use one method consistently to estimate the transaction price throughout the life of a contract. Ind AS 17 Leases: 19. III. It permits either, ï¿½ Full Retrospective' adoption in which the standard is applied to all of the periods presented; OR. Yes, since it only permits membership and there is no significant collection uncertainty. However, this does not imply that entities can ignore past revenue contracts. In convergence with IFRS, the Ministry of Corporate Affairs (MCA) issued Ind AS 115, Revenue from … However, the same was later on withdrawn. There is no probable inflow of economic benefits. Contract modification can be accounted for termination of existing contract and creation of a new contract if the remaining goods or services are distinct from the goods or services transferred on or before the date of contract modification. ‘Revenue’ may more easily be understood to mean income arising from ordinary activities of an entity. Thus, revenue recognition emphasizes on the timing of recognition of revenue in the statement of profit and loss of an enterprise. In situations where control over an asset (goods or services) is transferred at a single point in time, an entity recognizes revenue by evaluating when the customer obtains control of the asset. Control is considered to be transferred over time if one of the following conditions exists: ï¿½ Customer controls the asset as it is created or enhanced by entity's performance under the contract, ï¿½ A customer receives a benefit from the entity's performance as the entity performs. Identify the Contract with a customer. A, a club, charges Rs 100,000 as entrance fee. Stand-alone selling price is price at which entity would sell a promised good or service separately to a customer. Other Articles by - Under Indian Accounting Standards (Ind AS), revenue is measured at the fair value of the consideration received/receivable, taking into account any trade discounts and volume rebate. (E.g.- Sales Commission etc.). This method is permitted only if the entity either: ï¿½ Sells the same good/service to different customers (at or near the same time) for a broad range of amounts; or. A contract can be written, oral or implied by an entity's customary business practices. Entities may agree to provide goods or services for consideration that varies upon certain future events which may or may not occur. In this post, we will see in detail the specific differences between the Revenue recognition as per Accounting Standards and Revenue / Turnover as per GST Law. It focuses on transfer of significant risks and rewards approach for revenue recognition. 2. Can A recognize the entrance fee as revenue upon receipt? 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