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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 is the position on penalties when determining the transaction price?

Ind AS 115 removes penalties from the examples of variable consideration in paragraph 51 and inserts paragraph 51AA to explain their accounting treatment. This differs from IFRS 15, where penalties appear in paragraph 51 itself.

  1. APenalties are listed in paragraph 51 as an example of why consideration may vary, exactly as in IFRS 15
  2. BPenalties are excluded from the examples in paragraph 51, and paragraph 51AA separately explains their accounting treatmentCorrect
  3. CPenalties are ignored entirely and Ind AS 115 gives no guidance on them
  4. DPenalties are covered only by paragraph 113 as a disclosure item

Explanation

Ind AS 115 amends paragraph 51 to drop 'penalties' from the list of reasons consideration may vary. Paragraph 51AA is inserted to explain how penalties are accounted for. Option A describes IFRS 15, not Ind AS 115.

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