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CMA Final · Corporate Financial Reporting · Revenue from Contracts with Customers (Ind AS 115)

Under Ind AS 115 as notified in India, which of the following correctly describes the treatment of 'penalties' when determining the transaction price, compared with IFRS 15?

Ind AS 115 deletes 'penalties' from the examples of variable consideration in paragraph 51, unlike IFRS 15, and inserts paragraph 51AA to explain how penalties are accounted for. The change is a carve-out specific to the Indian standard, so penalties are not simply listed as variable consideration.

  1. APenalties remain in the list of examples of variable consideration in paragraph 51, exactly as in IFRS 15
  2. BPenalties are removed from the list of examples in paragraph 51 of Ind AS 115, and paragraph 51AA is inserted to explain their accounting treatmentCorrect
  3. CPenalties are removed from Ind AS 115 entirely and are not addressed anywhere in the Standard
  4. DPenalties are moved to paragraph 109AA, which deals with their presentation alongside excise duty

Explanation

The comparison appendix states that paragraph 51 of Ind AS 115 was amended to exclude 'penalties' from the examples of why consideration can vary. Paragraph 51AA was inserted to explain how penalties are accounted for. Option A reflects IFRS 15, not Ind AS 115. Paragraph 109AA relates to excise duty, not penalties.

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