As 09

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As 09

  1. 1. ACCOUNTING STANDARD-9 REVENUE RECOGNITION
  2. 2. PURPOSE <ul><li>Recognising revenue arising in the course of the ordinary activities of the enterprise </li></ul>
  3. 3. SCOPE <ul><li>It includes the following activities: </li></ul><ul><li>The sale of goods. </li></ul><ul><li>The rendering of services . </li></ul><ul><li>The use by others of enterprise resources yielding interest, royalties and dividends. </li></ul>
  4. 4. NON APPLICABLITY <ul><li>This statement does not deal with the following aspects: </li></ul><ul><li>Revenue arising from construction contracts. </li></ul><ul><li>Revenue arising from hire-purchase, lease agreements. </li></ul><ul><li>Revenue arising from government grants and other similar subsidies. </li></ul><ul><li>Revenue of insurance companies arising from insurance contracts. </li></ul>
  5. 5. REVENUE RECOGNITION IN SALE OF GOODS <ul><li>CONDITIONS: </li></ul><ul><li>The property in goods in transferred for a price. </li></ul><ul><li>All significant risks and rewards have been transferred and no effective control is retained. </li></ul><ul><li>No significant uncertainty exists regarding the amount of consideration. </li></ul><ul><li>It is reasonable to expect ultimate collection of consideration. </li></ul>
  6. 6. REVENUE RECOGNITION IN RENDERING OF SERVICES <ul><li>CONDITIONS: </li></ul><ul><li>Service is recognised either on completed service or proportionate completion method. </li></ul><ul><li>No, 1significant uncertainty exists regarding amount of consideration. </li></ul><ul><li>It is reasonable to expect ultimate collection of consideration. </li></ul>
  7. 7. REVENUE RECOGNITION IN RENDERING OF SERVICES <ul><ul><ul><li>Completed service method recognises revenue only when service complete or substantially complete. In such cases there are more than one act involved and revenue is recognised on' execution of all those acts. </li></ul></ul></ul><ul><ul><ul><li>Proportionate completed method recognises revenue proportionate with the degree of completion of services. n such cases there are more than one act involved and revenue is recognised on execution of certain acts. </li></ul></ul></ul>
  8. 8. REVENUE RECOGNITION IN USE OF ENTERPRISE RESOURCESBY OTHERS <ul><li>Interest : Revenue is recognised on the time basis determined by the amount outstanding and the rate applicable. </li></ul><ul><li>Royalty : Revenue is recognised in accordance with the terms of the relevant agreement. </li></ul><ul><li>Dividends : Revenue is recognised only when a right to receive payment is established. </li></ul>
  9. 9. DISCLOSURE REQUIREMENTS <ul><li>When recognition of revenue is postponed due to the effect of uncertainties, an enterprise should disclose the circumstances in which revenue recognition has been postponed. </li></ul>

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