Recognition of income accrual
This query is : Resolved
05 February 2021
-Contract contains rate escalation Clause which is calculated and paid in next reporting period.
- historically rate escalation is recognized when paid
-policy changed from current reporting period and income is accrued based on robust estimation
-this results in income recognition of previous period and current period in same year
- auditor is challenging this and insist on resatatement of previous period
-we argue that this is change in estimates and no need to restate previous year account
Pls. advise
- historically rate escalation is recognized when paid
-policy changed from current reporting period and income is accrued based on robust estimation
-this results in income recognition of previous period and current period in same year
- auditor is challenging this and insist on resatatement of previous period
-we argue that this is change in estimates and no need to restate previous year account
Pls. advise
CA R SEETHARAMAN
(Expert)
06 February 2021
Yes, you are right it's change in accounting policy no need for restate previous year account. Disclose the impact on profit due to the change.
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