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

Ind AS 115 as notified in India differs from IFRS 15 in its treatment of penalties. A contractor, Bharat Infra Ltd, expects to pay a penalty to a customer for delayed delivery. Which statement correctly reflects the Indian position?

Ind AS 115 amends paragraph 51 to remove penalties from the examples of why consideration may vary, unlike IFRS 15, and adds paragraph 51AA to explain how penalties are accounted for. Hence penalties are handled under that separate paragraph rather than as listed variable consideration.

  1. APenalties remain in the list of examples in para 51 of how consideration may vary, identical to IFRS 15
  2. BPara 51 of Ind AS 115 excludes 'penalties' from its examples of variable consideration, and para 51AA separately explains the accounting for penaltiesCorrect
  3. CPenalties are disregarded entirely and never affect revenue accounting
  4. DPenalties are always recognised as a separate expense in other comprehensive income

Explanation

The Indian standard amended para 51 to remove 'penalties' from the list of reasons consideration can vary, and inserted para 51AA to explain the accounting treatment of penalties. So the IFRS 15 listing is not retained. The other options mischaracterise the position.

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