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CA Intermediate · Advanced Accounting · AS 9 Revenue Recognition

Anand Publications Ltd sells annual subscriptions to a magazine, which is issued 12 times a year, with each issue of similar value. On 1 January 2026 it received Rs 7,20,000 for subscriptions covering 12 monthly issues beginning January 2026. The year ends 31 March 2026. How much should be recognised as revenue for FY 2025-26?

Revenue for FY 2025-26 is Rs 1,80,000. Since each monthly issue has similar value, AS 9 permits straight-line recognition over the subscription period, so three of the twelve issues delivered by 31 March give 7,20,000 x 3/12; the rest is unearned.

  1. ARs 7,20,000
  2. BRs 1,80,000Correct
  3. CRs 2,40,000
  4. DRs 60,000

Explanation

Where articles of similar value are delivered in each period, revenue is recognised on a straight-line basis over the period of delivery. Issues for January, February and March are delivered: 7,20,000 x 3/12 = Rs 1,80,000. Rs 7,20,000 wrongly recognises the cash receipt. Rs 2,40,000 would correspond to 4 months, and Rs 60,000 to one month.

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