Revenue recognition

chintan mehta (Chartered Accountant) (445 Points)

01 December 2011

how to recognise revenue of a software company according to As 9???

plz explain in detail

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Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 06 December 2011

Revenue should be recognized by applying the principles as laid down in AS9- Revenue Recognition.

As per the AS revenue in case of sale of goods should be recognized when the seller has transferred the

property in the goods to the buyer for a consideration

In a transaction involving the sale of goods, performance should

be regarded as being achieved when the following conditions have been fulfilled:

(i) the seller of goods has transferred to the buyer the property

in the goods for a price or all significant risks and rewards of

ownership have been transferred to the buyer and the seller

retains no effective control of the goods transferred to a degree

usually associated with ownership; and

(ii) no significant uncertainty exists regarding the amount of the

consideration that will be derived from the sale of the goods.

So you will have recognize revenue from sale of the software products by applying the above principles.

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