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CA Final · Financial Reporting · Ind AS 115 Revenue from Contracts with Customers

Himalaya Textiles Ltd prepares its financial statements under Ind AS. During the year it earned Rs 9 crore from contracts with customers and Rs 40 lakh as interest on fixed deposits. It also recognised an impairment loss of Rs 6 lakh on trade receivables arising from customer contracts, and none of these items is separately presented on the face of the statement of profit and loss. Which disclosure does Ind AS 115 require?

Ind AS 115 requires revenue from contracts with customers to be disclosed separately from other revenue sources, such as interest. It also requires impairment losses on receivables or contract assets from customer contracts to be disclosed separately from impairment losses on other contracts, unless shown on the face of the statement of profit and loss.

  1. ADisclose revenue from contracts with customers separately from other sources of revenue, and disclose the impairment loss on customer-contract receivables separately from impairment losses on other contractsCorrect
  2. BDisclose only the total of Rs 9.40 crore as revenue, since interest is also income
  3. CDisclose the impairment loss of Rs 6 lakh by netting it against revenue from contracts with customers
  4. DDisclose revenue from contracts with customers only if it exceeds 10% of total income

Explanation

Paragraph 113 requires revenue from contracts with customers to be disclosed separately from other sources of revenue. It also requires impairment losses on receivables or contract assets from customer contracts to be disclosed separately from impairment losses on other contracts, unless presented on the face of the statement. Combining the interest with revenue or netting the impairment against revenue breaches this.

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