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As-9 revenue recognition

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sangmesh

CA Final Year Student

26 Points Posted on 30 July 2011

Dear All

Pls tell me wht is the right a/cing policy to write for revenue recognition

Situation : Revenue recognition for completed services other than constuction field .And revenue recognition done on the basis of agreement done between two parties and it is 80% billing done in current year and remaining 15% & 5% to be done in next year without any fix period for recognition.The work is already completed.wht to do?

1.To be recogise in current year for remaining billing

2. to be done in next year ,by considering periodical biiling.

(15% billing done on verification basis and 5% after satisfication of work depends upon terms of different works assigned.)

Replies (1)

shashank

CA-FINAL Student

46 Points Posted on 31 July 2011

Hello Sangmesh,

As per your query, the revenue can be divided into two parts :

1. Billed Revenue(80 %)

2.Unbilled Revenue (Remaining 20 %)

Billed revenue is anyway recognised in your books as current year income as per AS-9.

When Unbilled revenue is taken into consideration, you should recognise it as CURRENT YEAR's income. Just because we haven't billed it this year, it cannot be treated as some other year's income. Revenue accrual period is more important than the bill dated period.

However, AS 9 talks about two more concepts

a.Reasonableness

b.Realisability

Therefore in your case revenue can be recognised if it is