New Accounting Standard on Revenue Accounting

The Minisry of Corporate Affairs recently notified Indian Accounting Standard (Ind AS) 115 to help in more transparent accounting of revenues and have an impact on companies operating in diverse sectors, including technology, real estate and telecom.

The objective of Ind AS 115 is to establish the principles that an entity should apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer, as per the ministry’s notification.

The standard requires an entity to recognise revenue “to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services”