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

Sunrise Pharma Ltd sells medicines to hospitals. During the year, it recognised revenue from contracts with customers and, separately, an expected credit loss of Rs 4 lakh on trade receivables arising from those contracts. It also recognised an Rs 2 lakh impairment loss on a loan given to a supplier. Under Ind AS 115, which disclosure is required for the impairment losses, unless presented separately in the statement of profit and loss?

Sunrise Pharma must disclose the Rs 4 lakh impairment on receivables from customer contracts separately from impairment losses on other contracts, such as the Rs 2 lakh supplier loan. Ind AS 115 requires this separate disclosure, so a single Rs 6 lakh combined figure would be non-compliant.

  1. ADisclose the Rs 6 lakh total as one impairment figure, since all are financial assets
  2. BDisclose the Rs 4 lakh on customer-contract receivables separately from impairment losses from other contracts, such as the Rs 2 lakh loanCorrect
  3. CDisclose only the Rs 2 lakh loan impairment, because receivables impairment is part of revenue
  4. DDisclose no impairment loss, because Ind AS 115 does not deal with impairment

Explanation

Ind AS 115 requires disclosure of impairment losses recognised under Ind AS 109 on receivables or contract assets arising from contracts with customers, separately from impairment losses from other contracts. So the Rs 4 lakh is shown separately from the Rs 2 lakh on the supplier loan. Aggregating them to Rs 6 lakh would defeat this requirement.

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