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Ind AS 115 - Revenue from Contracts with Customers

CA Akhil Jain , Last updated: 17 April 2018  
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Ind AS 115 was notified on March 28, 2018 and establishes a five-step model to account for revenue arising from contracts with customers. The new revenue standard supersedes all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after April 1, 2018. When an entity has not applied a new standard that has been issued but is not yet effective, Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors (‘Ind AS 8’) requires the entity to disclose that fact and known or reasonably estimable information relevant to assessing the possible impact that application of a standard will have on the financial statements in the period of initial application.

In producing the above disclosure, an entity is required to consider disclosing all of the following:

(a) the title of the new Ind AS;

(b) the nature of the impending change or changes in accounting policy;

(c) the date by which application of the Ind AS is required;

(d) the date as at which it plans to apply Ind AS initially; and

(e) a discussion of the impact that initial application of Ind AS is expected to have on the entity’s financial statements; or if that impact is not known or reasonably estimable, a statement to that effect.

In addition to above, the entity should also disclose whether it intends to apply the full or modified retrospective transition method.  If the entity has not yet decided, it should make a statement that it is still evaluating the transition method. 

Indian regulators have not yet specified their expectations with regard to disclosures required in the March 2018 financial statements for impact likely to arise from the application of Ind AS 115. However, it may be noted that all Ind AS companies will start applying Ind AS 115 from April 1, 2018, onward and listed entities having 31 March year-end will publish their June 2018 quarterly financial results using Ind AS 115 principles. Hence, one will expect a high degree of preparedness. Particularly, Indian entities should be geared up for providing high-quality data on likely Ind AS 115 impact in the March 2018 financial statements.


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CA Akhil Jain
(CA Job)
Category Accounts   Report

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