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Revenue recognition by indian railways.

Hamid (CA) (38 Points)

16 May 2014

Can someone tell me how Indian railways recognise revenue(as per AS-9) from sale of ticket coupons of Mumbai local train? According to me they should recognise the revenue at the time of sale of ticket coupon. But, is it against the revenue recognition criteria prescribed by AS-9? Because, as per AS-9, revenue can be recognised as per two methods: Percentage completed method and Contract completion method. If it is against the recognition criteria, whether auditors of Indian railways give a qualified report?

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2 Replies

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 16 May 2014

I think you have putted wrong question bcs the method for which you are talking is of As- 7 under which two mwthod of booking revenue is prescribed.

its not of As -9

In the business enterprise when revenue of sale of good should be recognised it is depends up on satisfying following conditions. All these conditions must be satisfied to recognise income in books of accounts.

- Seller should have transferred the ownership of goods to purchaser for the consideration or all significant risk & rewards of ownership should have transferred to buyer.

- There should not be any kind of uncertainty for collection or receipt of cash, consideration or receivable etc.

- Seller does not retain any direct or effective control on such goods transferred.

Hence the revenue should be recognised accordingly.

Hamid (CA) (38 Points)
Replied 16 May 2014

Dear Saroj, Thank you for the reply. I am talking about the AS-9. For the service provider, two methods have been prescribed by the AS-9. In general, I know the rules as to how to recognise the revenue. Whatever you have replied is in relation to sale of goods and not in relation to service. Railways are service providor. I want a answer for the situation which I have mentioned above in my query. Pls provide me solution to that.