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IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities

Under Ind AS 115, revenue from contracts with customers is recognised using which approach?

Ind AS 115 uses a five-step model under which revenue is recognised as each performance obligation is satisfied, at a point in time or over time. Cash receipt, contract signing, year-end or straight-line spreading regardless of delivery are not the basis.

  1. AWhen cash is received, regardless of performance
  2. BWhen the contract is signed
  3. CA five-step model recognising revenue as performance obligations are satisfiedCorrect
  4. DOnly at the end of the financial year
  5. Equally over the life of every contract, regardless of delivery

Explanation

Ind AS 115 uses a five-step model: identify the contract, identify performance obligations, determine the price, allocate it, and recognise revenue as each obligation is satisfied. Cash receipt, signing or year-end timing do not drive recognition.

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