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CA Intermediate · Advanced Accounting · AS 25 Interim Financial Reporting

Vindhya Cements Ltd earns a cyclical, seasonal revenue, with most sales in the second half of the year. For the quarter ended 30 June 2026 it earned revenue of ₹50 crore. Management proposes to anticipate additional revenue of ₹20 crore in that quarter to smooth the pattern across the year. How should the revenue be treated under AS 25?

Only the ₹50 crore actually earned is recognised. AS 25 prohibits anticipating or deferring seasonal or cyclical revenue at an interim date when it would be inappropriate at year end, though the seasonality may be disclosed.

  1. ARecognise only the ₹50 crore actually earned and not anticipate or defer revenue, disclosing the seasonal natureCorrect
  2. BRecognise ₹70 crore to even out the year
  3. CRecognise ₹50 crore and defer it to the second half
  4. DRecognise ₹60 crore, being the average of the two

Explanation

AS 25 states that revenue received seasonally, cyclically or occasionally within a year should not be anticipated or deferred at the interim date if anticipation or deferral would not be appropriate at year end. Hence only ₹50 crore is recognised; disclosure of the seasonal nature is encouraged.

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