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

Kaveri Spirits Ltd manufactures liquor, on which excise duty is payable. Its revenue recognised in the statement of profit and loss for the year includes excise duty. A trainee proposes to present revenue as a single figure with no mention of the excise duty component. What does the Ind AS 115 text, as modified from IFRS 15, require?

The amount of excise duty included in the revenue recognised must be presented separately in the statement of profit and loss. Ind AS 115 inserts paragraph 109AA for this purpose, a difference from IFRS 15, so a single revenue figure without showing the excise duty component is not acceptable.

  1. AExcise duty must be excluded from revenue and ignored in the presentation
  2. BExcise duty must be shown only in the notes to accounts as a contingent liability
  3. CExcise duty may be presented as part of cost of materials consumed without separate disclosure
  4. DThe amount of excise duty included in revenue must be presented separately in the statement of profit and lossCorrect

Explanation

Ind AS 115 includes paragraph 109AA, a carve-out from IFRS 15, requiring the entity to present separately the amount of excise duty included in revenue recognised in the statement of profit and loss. Presenting a single figure with no mention fails this. Excise duty is not treated as a contingent liability here.

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