Accounting Services As Per INDAS

IND AS 18 Revenue Recognition

IND AS 18 Revenue Recognition sets the guidelines as to when to recognize the revenue arising from certain types of transactions and the accounting treatment of the same. Revenue is recognized when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

Applicability of IND AS 18 Revenue Recognition

This Standard should be applied in accounting for revenue arising from the following transactions:
  • Sale of goods
  • Rendering of Services
  • Use of entity assets yielding Interest, Royalties or Dividends

Important Definition

  • Income is the increase in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases in the liabilities that result in an increase in equity, other than contributions from equity participants.
  • Revenue is income that arises in the course of ordinary activities of an entity and if referred to by the variety of different names including sales, fees, interest, dividends, and royalties.
  • Fair Value (FV) is the amount for which an asset could be exchanged or the liability settled between knowledgeable, willing parties in an arm’s length transaction.

Measurement of Revenue

Revenue is measured at FV of the consideration received or receivable after deducting trade discounts and rebates. When the inflow of cash (or cash equivalents) is deferred, FV can be less than the nominal amount of cash. Under an effective financing transaction, the fair value of the consideration is determined by discounting all future receipts using an imputed rate of interest.
Interest Revenue = Fair Value of consideration – Nominal Amount of consideration
The imputed rate of interest is the more clearly determinable of either:
  • Prevailing rate for a similar instrument of an issue with a similar credit rating
  • Rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goods or services

Identification of Transaction

This standard is usually separately applied to each transaction but to reflect the substance of the transaction, it can be applied to separately identifiable components of a single transaction. For example, when the product price includes a substantial amount for subsequent servicing, that amount is deferred and recognized as revenue when that service is performed. On the other hand, to understand the commercial effect of series of transactions, recognition criteria can be applied together on two or more transactions at the same time.

Sale of Goods

Recognise revenue from the sale of goods when all below conditions are met:
  • Transfer of significant risks and rewards of ownership
  • Neither continuing managerial involvement nor effective control
  • Probable future economic benefits
  • Reliable measurement of revenue
  • Reliable measurement of costs

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Choose TaxBizz India as your service provider for rectification of accounting services as per INDAS for their proven track record of delivering accurate and compliant financial reporting solutions tailored to INDAS standards. With their deep understanding of regulatory requirements and extensive experience in accounting practices, TaxBizz India ensures precise and timely rectification of financial statements, providing peace of mind and assurance of regulatory compliance for your organization.

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