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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. Its statement of profit and loss shows revenue from contracts with customers and also interest income earned on fixed deposits and rental income from a surplus warehouse. Which of the following disclosure approaches is consistent with Ind AS 115?

Himalaya Textiles must disclose revenue recognised from contracts with customers separately from its other sources of revenue, such as interest and rent. Ind AS 115 requires this separate disclosure, so combining all income into a single revenue figure would not comply with the standard.

  1. ADisclose revenue recognised from contracts with customers separately from the entity's other sources of revenueCorrect
  2. BCombine contract revenue with interest and rental income in one line so that total revenue is not split
  3. CDisclose contract revenue only in the notes and leave it out of the statement of profit and loss
  4. DDisclose only the revenue from contracts with customers and omit other sources of revenue entirely

Explanation

Ind AS 115 requires revenue recognised from contracts with customers to be disclosed separately from the entity's other sources of revenue, unless presented separately in the statement of profit and loss under other Standards. Combining them into one line, as in the second option, would breach this requirement. The other options misstate where or whether disclosure is needed.

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