TMI BlogCompanies (Indian Accounting Standards) Amendment Rules, 2018X X X X Extracts X X X X X X X X Extracts X X X X ..... , the following shall be inserted, namely:- Effective Date 34 * 35 * 36 * 37 * 38 * 39 * 39A * 39B * 39C * 39D * 39E * 39F * 39G * 39H * 39I * 39J * 39K * 39L * 39M * 39N * 39O * 39P * 39Q * 39R * 39S * 39T * 39U * 39V * 39W * 39X As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers , paragraphs D1(m),(u), D22 and heading after paragraph D33 are amended, paragraphs D34-D35 are added and earlier paragraph D36 in context of Transfer of assets from customers is deleted. An entity shall apply those amendments when it applies Ind AS 115. 39Y * 39Z * 39AA * 39AB * 39AC Appendix B, Foreign Currency Transactions and Advance Consideration of Ind AS 21 added paragraph D36 in context of foreign currency transactions and advance consideration and in paragraph D1, renumbered item (v) as (ua) and a new item (v) is added in its place. An entity shall apply that amendment when it applies Appendix B of Ind AS 21. (ii) in Appendix D,- (a) in paragraph D1, - (i) for item (m), the following item shall be substituted, namely:- (m) financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retained in Ind AS 101. ; II. in Indian Accounting Standard (Ind AS) 103 , - (i) for paragraphs 56, the following paragraph shall be substituted, namely:- 56 After initial recognition and until the liability is settled, cancelled or expires, the acquirer shall measure a contingent liability recognised in a business combination at the higher of : (a) the amount that would be recognised in accordance with Ind AS 37; and (b) the amount initially recognised less, if appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115, Revenue from Contracts with Customers. This requirement does not apply to contracts accounted for in accordance with Ind AS 109. ; (ii) after paragraph 63, the following shall be inserted, namely:- Effective Date 64 * 64A * 64B * 64C * 64D * 64E * 64F * 64G * 64H * 64I * 64J * 64K As a consequence of issuance of Ind AS 115, paragraph 56 has been amended. An entity shall follow the amendment when it applies Ind AS 115. ; (iii) in Appendix 1, after paragraph 4, the following paragraph shall be inserted, namely:- 5. Paragraphs 64 to 64J related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe, because they are within the scope of Ind AS 115 and Ind AS 37. ; (c) for paragraph B21, the following paragraph shall be substituted, namely:- B21 If the contracts described in paragraph B19 do not create financial assets or financial liabilities, Ind AS 115 applies. Under Ind AS 115, revenue is recognised when (or as) an entity satisfies a performance obligation by transferring a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled . (D) in Appendix 1, after paragraph 3, the following paragraph shall be inserted, namely:- 4. Paragraphs 40 to 41F related to effective date have not been included in Ind AS 104 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 4, these paragraph numbers are retained in Ind AS 104. ; IV. in Indian Accounting Standard (Ind AS) 107 ,- (i) for paragraph 5A, the following paragraph shall be substituted, namely:- 5A The credit risk disclosure requirements in paragraphs 35A to 35N apply to those rights that Ind AS 115 , Revenue from Contracts with Customers specifies are accounted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ognition, an entity shall measure trade receivables at their transaction price (as defined in Ind AS 115) if the trade receivables do not contain a significant financing component in accordance with Ind AS 115 (or when the entity applies the practical expedient in accordance with paragraph 63 of Ind AS 115). ; (vi) for paragraph 5.5.1, the following paragraph shall be substituted, namely:- 5.5.1 An entity shall recognise a loss allowance for expected credit losses on a financial asset that is measured in accordance with paragraphs 4.1.2 or 4.1.2A, a lease receivable, a contract asset or a loan commitment and a financial guarantee contract to which the impairment requirements apply in accordance with paragraphs 2.1(g), 4.2.1(c) or 4.2.1(d). ; (vii) for paragraph 5.5.15, the following paragraph shall be substituted, namely:- 5.5.15 Despite paragraphs 5.5.3 and 5.5.5, an entity shall always measure the loss allowance at an amount equal to lifetime expected credit losses for: (a) trade receivables or contract asset that result from transactions that are within the scope of Ind AS 115, and that: (i) do not contain a significant financing component in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ind AS 107) is used in the requirements for presenting the effects of changes in credit risk on liabilities designated as at fair value through profit or loss (see paragraph 5.7.7). (x) in Appendix B, (1) for paragraph B2.2, the following paragraph shall be substituted, namely:- B2.2 This Standard does not change the requirements relating to royalty agreements based on the volume of sales or service revenues that are accounted for under Ind AS 115, Revenue from Contracts with Customers . ; (2) in paragraph B2.5,- (i) in item (a), for sub-item (ii), the following sub-item shall be substituted, namely:- (ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115 [see paragraph 4.2.1(c)]. ; (ii) for item (c), the following item shall be substituted, namely:- (c) If a financial guarantee contract was issued in connection with the sale of goods, the issuer applies Ind AS 115 in determining when it recognises the revenue from the guarantee and from the sale of goods. ; (3) for paragraph B3.2.1, the following paragraph shall be substituted, namely:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in Ind AS 109. ; VI. in Indian Accounting Standard (Ind AS) 112 , - (i) after paragraph 5, the following paragraph shall be inserted, namely:- 5A Except as described in paragraph B17, the requirements in this Ind AS apply to an entity s interests listed in paragraph 5 that are classified (or included in a disposal group that is classified) as held for sale or discontinued operations in accordance with Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. ; (ii) in Appendix B, for paragraph B17, the following paragraph shall be substituted, namely:- B17 When an entity s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) is classified (or included in a disposal group that is classified) as held for sale in accordance with Ind AS 105, the entity is not required to disclose summarised financial information for that subsidiary, joint venture or associate in accordance with paragraphs B10 B16. ; (iii) after Appendix B, the following Appendix shall be inserted, namely:- Appendix C, Effective date and transition This appendix is an integral part of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics if the entity reasonably expects that the effects on the financial statements of applying this Standard to the portfolio would not differ materially from applying this Standard to the individual contracts (or performance obligations) within that portfolio. When accounting for a portfolio, an entity shall use estimates and assumptions that reflect the size and composition of the portfolio. Scope 5 An entity shall apply this Standard to all contracts with customers, except the following: (a) lease contracts within the scope of Ind AS 17, Leases ; (b) insurance contracts within the scope of Ind AS 104, Insurance Contracts ; (c) financial instruments and other contractual rights or obligations within the scope of Ind AS 109, Financial Instruments , Ind AS 110, Consolidated Financial Statements , Ind AS 111, Joint Arrangements , Ind AS 27, Separate Financial Statements and Ind AS 28, Investments in Associates and Joint Ventures ; and (d) non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. For example, this Standard would not apply to a contract between two oil companies that agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is within the scope of this Standard only when all of the following criteria are met: (a) the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations; (b) the entity can identify each party s rights regarding the goods or services to be transferred; (c) the entity can identify the payment terms for the goods or services to be transferred; (d) the contract has commercial substance (ie the risk, timing or amount of the entity s future cash flows is expected to change as a result of the contract); and (e) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine whether the criteria in paragraph 9 are subsequently met. 15 When a contract with a customer does not meet the criteria in paragraph 9 and an entity receives consideration from the customer, the entity shall recognise the consideration received as revenue only when either of the following events has occurred: (a) the entity has no remaining obligations to transfer goods or services to the customer and all, or substantially all, of the consideration promised by the customer has been received by the entity and is non-refundable; or (b) the contract has been terminated and the consideration received from the customer is non-refundable. 16 An entity shall recognise the consideration received from a customer as a liability until one of the events in paragraph 15 occurs or until the criteria in paragraph 9 are subsequently met (see paragraph 14). Depending on the facts and circumstances relating to the contract, the liability recognised represents the entity s obligation to either transfer goods or services in the future or refund the consideration received. In either case, the liability shall be measured at the amount of consideration received from the customer. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract modification as a separate contract if both of the following conditions are present: (a) the scope of the contract increases because of the addition of promised goods or services that are distinct (in accordance with paragraphs 26 30); and (b) the price of the contract increases by an amount of consideration that reflects the entity s stand-alone selling prices of the additional promised goods or services and any appropriate adjustments to that price to reflect the circumstances of the particular contract. For example, an entity may adjust the stand-alone selling price of an additional good or service for a discount that the customer receives, because it is not necessary for the entity to incur the selling-related costs that it would incur when selling a similar good or service to a new customer. 21 If a contract modification is not accounted for as a separate contract in accordance with paragraph 20, an entity shall account for the promised goods or services not yet transferred at the date of the contract modification (ie the remaining promised goods or services) in whichever of the following ways is applicable: (a) An entity shall account for the contract m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t good or service in the series that the entity promises to transfer to the customer would meet the criteria in paragraph 35 to be a performance obligation satisfied over time; and (b) in accordance with paragraphs 39 40, the same method would be used to measure the entity s progress towards complete satisfaction of the performance obligation to transfer each distinct good or service in the series to the customer. Promises in contracts with customers 24 A contract with a customer generally explicitly states the goods or services that an entity promises to transfer to a customer. However, the performance obligations identified in a contract with a customer may not be limited to the goods or services that are explicitly stated in that contract. This is because a contract with a customer may also include promises that are implied by an entity s customary business practices, published policies or specific statements if, at the time of entering into the contract, those promises create a valid expectation of the customer that the entity will transfer a good or service to the customer. 25 Performance obligations do not include activities that an entity must undertake to ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable from other promises in the contract (ie the promise to transfer the good or service is distinct within the context of the contract). 28 A customer can benefit from a good or service in accordance with paragraph 27(a) if the good or service could be used, consumed, sold for an amount that is greater than scrap value or otherwise held in a way that generates economic benefits. For some goods or services, a customer may be able to benefit from a good or service on its own. For other goods or services, a customer may be able to benefit from the good or service only in conjunction with other readily available resources. A readily available resource is a good or service that is sold separately (by the entity or another entity) or a resource that the customer has already obtained from the entity (including goods or services that the entity will have already transferred to the customer under the contract) or from other transactions or events. Various factors may provide evidence that the customer can benefit from a good or service either on its own or in conjunction with other readily available resources. For example, the fact that the entity regularly sells a good or service sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a customer. An asset is transferred when (or as) the customer obtains control of that asset. 32 For each performance obligation identified in accordance with paragraphs 22 30, an entity shall determine at contract inception whether it satisfies the performance obligation over time (in accordance with paragraphs 35 37) or satisfies the performance obligation at a point in time (in accordance with paragraph 38). If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. 33 Goods and services are assets, even if only momentarily, when they are received and used (as in the case of many services). Control of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. Control includes the ability to prevent other entities from directing the use of, and obtaining the benefits from, an asset. The benefits of an asset are the potential cash flows (inflows or savings in outflows) that can be obtained directly or indirectly in many ways, such as by: (a) using the asset to produce goods or provide services (including public services); (b) using the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensates the entity for performance completed to date if the contract is terminated by the customer or another party for reasons other than the entity s failure to perform as promised. Paragraphs B9 B13 provide guidance for assessing the existence and enforceability of a right to payment and whether an entity s right to payment would entitle the entity to be paid for its performance completed to date. Performance obligations satisfied at a point in time 38 If a performance obligation is not satisfied over time in accordance with paragraphs 35 37, an entity satisfies the performance obligation at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity shall consider the requirements for control in paragraphs 31 34. In addition, an entity shall consider indicators of the transfer of control, which include, but are not limited to, the following: (a) The entity has a present right to payment for the asset-if a customer is presently obliged to pay for an asset, then that may indicate that the customer has obtained the ability to direct the use of, and obtain substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of, and obtain substantially all of the remaining benefits from, the asset. To evaluate the effect of a contractual customer acceptance clause on when control of an asset is transferred, an entity shall consider the guidance in paragraphs B83 B86. Measuring progress towards complete satisfaction of a performance obligation 39 For each performance obligation satisfied over time in accordance with paragraphs 35 37, an entity shall recognise revenue over time by measuring the progress towards complete satisfaction of that performance obligation. The objective when measuring progress is to depict an entity s performance in transferring control of goods or services promised to a customer (ie the satisfaction of an entity s performance obligation). 40 An entity shall apply a single method of measuring progress for each performance obligation satisfied over time and the entity shall apply that method consistently to similar performance obligations and in similar circumstances. At the end of each reporting period, an entity shall remeasure its progress towards complete satisfaction of a performance obligation satisfied over time. Methods for measuring progress 41 Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Determining the transaction price 47 An entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. 48 The nature, timing and amount of consideration promised by a customer affect the estimate of the transaction price. When determining the transaction price, an entity shall consider the effects of all of the following: (a) variable consideration (see paragraphs 50 55 and 59); (b) constraining estimates of variable consideration (see paragraphs 56 58); (c) the existence of a significant financing component in the contract (see paragraphs 60 65); (d) non-cash consideration (see paragraphs 66 69); and (e) consideration payable to a customer (see paragraphs 70 72). 49 For the purpose of determining the transaction price, an entity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the contract with the customer, is to offer a price concession to the customer. 53 An entity shall estimate an amount of variable consideration by using either of the following methods, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled: (a) The expected value-the expected value is the sum of probability-weighted amounts in a range of possible consideration amounts. An expected value may be an appropriate estimate of the amount of variable consideration if an entity has a large number of contracts with similar characteristics. (b) The most likely amount-the most likely amount is the single most likely amount in a range of possible consideration amounts (ie the single most likely outcome of the contract). The most likely amount may be an appropriate estimate of the amount of variable consideration if the contract has only two possible outcomes (for example, an entity either achieves a performance bonus or does not). 54 An entity shall apply one method consistently throughout the contract when estimating the effect of an uncertainty on an amount of variable consideration to which the entity will be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration is not expected to be resolved for a long period of time. (c) the entity s experience (or other evidence) with similar types of contracts is limited, or that experience (or other evidence) has limited predictive value. (d) the entity has a practice of either offering a broad range of price concessions or changing the payment terms and conditions of similar contracts in similar circumstances. (e) the contract has a large number and broad range of possible consideration amounts. 58 An entity shall apply paragraph B63 to account for consideration in the form of a sales-based or usage-based royalty that is promised in exchange for a licence of intellectual property. Reassessment of variable consideration 59 At the end of each reporting period, an entity shall update the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. The entity shall account for changes in the transaction price in accordance with paragraphs 87 90. The exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is a sales-based royalty). (c) the difference between the promised consideration and the cash selling price of the good or service (as described in paragraph 61) arises for reasons other than the provision of finance to either the customer or the entity, and the difference between those amounts is proportional to the reason for the difference. For example, the payment terms might provide the entity or the customer with protection from the other party failing to adequately complete some or all of its obligations under the contract. 63 As a practical expedient, an entity need not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. 64 To meet the objective in paragraph 61 when adjusting the promised amount of consideration for a significant financing component, an entity shall use the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as non-cash consideration received from the customer. Consideration payable to a customer 70 Consideration payable to a customer includes cash amounts that an entity pays, or expects to pay, to the customer (or to other parties that purchase the entity s goods or services from the customer). Consideration payable to a customer also includes credit or other items (for example, a coupon or voucher) that can be applied against amounts owed to the entity (or to other parties that purchase the entity s goods or services from the customer). An entity shall account for consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service (as described in paragraphs 26 30) that the customer transfers to the entity. If the consideration payable to a customer includes a variable amount, an entity shall estimate the transaction price (including assessing whether the estimate of variable consideration is constrained) in accordance with paragraphs 50 58. 71 If consideration payable to a customer is a payment for a distinct good or service from the customer, then an entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing price basis, an entity shall determine the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocate the transaction price in proportion to those stand-alone selling prices. 77 The stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer. The best evidence of a stand-alone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. A contractually stated price or a list price for a good or service may be (but shall not be presumed to be) the stand-alone selling price of that good or service. 78 If a stand-alone selling price is not directly observable, an entity shall estimate the stand-alone selling price at an amount that would result in the allocation of the transaction price meeting the allocation objective in paragraph 73. When estimating a stand-alone selling price, an entity shall consider all information (including market conditions, entity-specific factors and information about the customer or class of custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that estimated aggregate stand-alone selling price determined by the residual approach. When an entity uses a combination of methods to estimate the stand-alone selling price of each promised good or service in the contract, the entity shall evaluate whether allocating the transaction price at those estimated stand-alone selling prices would be consistent with the allocation objective in paragraph 73 and the requirements for estimating stand-alone selling prices in paragraph 78. Allocation of a discount 81 A customer receives a discount for purchasing a bundle of goods or services if the sum of the stand-alone selling prices of those promised goods or services in the contract exceeds the promised consideration in a contract. Except when an entity has observable evidence in accordance with paragraph 82 that the entire discount relates to only one or more, but not all, performance obligations in a contract, the entity shall allocate a discount proportionately to all performance obligations in the contract. The proportionate allocation of the discount in those circumstances is a consequence of the entity allocating the transaction price to each performance obligation on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment relate specifically to the entity s efforts to satisfy the performance obligation or transfer the distinct good or service (or to a specific outcome from satisfying the performance obligation or transferring the distinct good or service); and (b) allocating the variable amount of consideration entirely to the performance obligation or the distinct good or service is consistent with the allocation objective in paragraph 73 when considering all of the performance obligations and payment terms in the contract. 86 The allocation requirements in paragraphs 73 83 shall be applied to allocate the remaining amount of the transaction price that does not meet the criteria in paragraph 85. Changes in the transaction price 87 After contract inception, the transaction price can change for various reasons, including the resolution of uncertain events or other changes in circumstances that change the amount of consideration to which an entity expects to be entitled in exchange for the promised goods or services. 88 An entity shall allocate to the performance obligations in the contract any subsequent changes in the transaction price on the same basis as at contract incepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. 94 As a practical expedient, an entity may recognise the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less. Costs to fulfil a contract 95 If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, Ind AS 2, Inventories , Ind AS 16, Property, Plant and Equipment or Ind AS 38, Intangible Assets ), an entity shall recognise an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria: (a) the costs relate directly to a contract or to an anticipated contract that the entity can specifically identify (for example, costs relating to services to be provided under renewal of an existing contract or costs of designing an asset to be transferred under a specific contract that has not yet been approved); (b) the costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomer of the goods or services to which the asset relates. Such a change shall be accounted for as a change in accounting estimate in accordance with Ind AS 8. 101 An entity shall recognise an impairment loss in profit or loss to the extent that the carrying amount of an asset recognised in accordance with paragraph 91 or 95 exceeds: (a) the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates; less (b) the costs that relate directly to providing those goods or services and that have not been recognised as expenses (see paragraph 97). 102 For the purposes of applying paragraph 101 to determine the amount of consideration that an entity expects to receive, an entity shall use the principles for determining the transaction price (except for the requirements in paragraphs 56 58 on constraining estimates of variable consideration) and adjust that amount to reflect the effects of the customer s credit risk. 103 Before an entity recognises an impairment loss for an asset recognised in accordance with paragraph 91 or 95, the entity shall recognise any impairment loss for assets related to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 A receivable is an entity s right to consideration that is unconditional. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due. For example, an entity would recognise a receivable if it has a present right to payment even though that amount may be subject to refund in the future. An entity shall account for a receivable in accordance with Ind AS 109. Upon initial recognition of a receivable from a contract with a customer, any difference between the measurement of the receivable in accordance with Ind AS 109 and the corresponding amount of revenue recognised shall be presented as an expense (for example, as an impairment loss). 109 This Standard uses the terms contract asset and contract liability but does not prohibit an entity from using alternative descriptions in the balance sheet for those items. If an entity uses an alternative description for a contract asset, the entity shall provide sufficient information for a user of the financial statements to distinguish between receivables and contract assets. 109AA An entity shall present separately the amount of excise duty included in the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an entity shall disclose sufficient information to enable users of financial statements to understand the relationship between the disclosure of disaggregated revenue (in accordance with paragraph 114) and revenue information that is disclosed for each reportable segment, if the entity applies Ind AS 108, Operating Segments . Contract balances 116 An entity shall disclose all of the following: (a) the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers, if not otherwise separately presented or disclosed; (b) revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period; and (c) revenue recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods (for example, changes in transaction price). 117 An entity shall explain how the timing of satisfaction of its performance obligations (see paragraph 119(a)) relates to the typical timing of payment (see paragraph 119(b)) and the effect that those factors have on the contract asset and the contract liability balances. The explanation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng performance obligations: (a) the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period; and (b) an explanation of when the entity expects to recognise as revenue the amount disclosed in accordance with paragraph 120(a), which the entity shall disclose in either of the following ways: (i) on a quantitative basis using the time bands that would be most appropriate for the duration of the remaining performance obligations; or (ii) by using qualitative information. 121 As a practical expedient, an entity need not disclose the information in paragraph 120 for a performance obligation if either of the following conditions is met: (a) the performance obligation is part of a contract that has an original expected duration of one year or less; or (b) the entity recognises revenue from the satisfaction of the performance obligation in accordance with paragraph B16. 122 An entity shall explain qualitatively whether it is applying the practical expedient in paragraph 121 and whether any consideration from contracts with customers is not included in the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of revenue recognised in the statement of profit and loss with the contracted price showing separately each of the adjustments made to the contract price, for example, on account of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, etc., specifying the nature and amount of each such adjustment separately. Assets recognised from the costs to obtain or fulfil a contract with a customer 127 An entity shall describe both of the following: (a) the judgements made in determining the amount of the costs incurred to obtain or fulfil a contract with a customer (in accordance with paragraph 91 or 95); and (b) the method it uses to determine the amortisation for each reporting period. 128 An entity shall disclose all of the following: (a) the closing balances of assets recognised from the costs incurred to obtain or fulfil a contract with a customer (in accordance with paragraph 91 or 95), by main category of asset (for example, costs to obtain contracts with customers, pre-contract costs and setup costs); and (b) the amount of amortisation and any impairment losses recognised in the reporting period. Practical expedie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a customer , excluding amounts collected on behalf of third parties. Appendix B Application Guidance This appendix is an integral part of the Standard. It describes the application of paragraphs 1 129 and has the same authority as the other parts of the Standard. B1 This application guidance is organised into the following categories: (a) performance obligations satisfied over time (paragraphs B2 B13); (b) methods for measuring progress towards complete satisfaction of a performance obligation (paragraphs B14 B19); (c) sale with a right of return (paragraphs B20 B27); (d) warranties (paragraphs B28 B33); (e) principal versus agent considerations (paragraphs B34 B38); (f) customer options for additional goods or services (paragraphs B39 B43); (g) customers unexercised rights (paragraphs B44 B47); (h) non-refundable upfront fees (and some related costs) (paragraphs B48 B51); (i) licensing (paragraphs B52 B63B); (j) repurchase agreements (paragraphs B64 B76); (k) consignment arrangements (paragraphs B77 B78); (l) bill-and-hold arrangements (paragraphs B79 B82); (m) customer acceptance (paragraphs B83 B86) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is presently controlled by the entity and that would remain controlled by the entity if the performance obligation were to transfer to another entity. Customer controls the asset as it is created or enhanced (paragraph 35(b)) B5 In determining whether a customer controls an asset as it is created or enhanced in accordance with paragraph 35(b), an entity shall apply the requirements for control in paragraphs 31 34 and 38. The asset that is being created or enhanced (for example, a work-in-progress asset) could be either tangible or intangible. Entity s performance does not create an asset with an alternative use (paragraph 35(c)) B6 In assessing whether an asset has an alternative use to an entity in accordance with paragraph 36, an entity shall consider the effects of contractual restrictions and practical limitations on the entity s ability to readily direct that asset for another use, such as selling it to a different customer. The possibility of the contract with the customer being terminated is not a relevant consideration in assessing whether the entity would be able to readily direct the asset for another use. B7 A contractual restriction on an entity s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer (or another party); or (b) a reasonable return on the entity s cost of capital for similar contracts (or the entity s typical operating margin for similar contracts) if the contract-specific margin is higher than the return the entity usually generates from similar contracts. B10 An entity s right to payment for performance completed to date need not be a present unconditional right to payment. In many cases, an entity will have an unconditional right to payment only at an agreed-upon milestone or upon complete satisfaction of the performance obligation. In assessing whether it has a right to payment for performance completed to date, an entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date if the contract were to be terminated before completion for reasons other than the entity s failure to perform as promised. B11 In some contracts, a customer may have a right to terminate the contract only at specified times during the life of the contract or the customer might not have any right to terminate the contract. If a customer acts to terminate a contract without having the right to terminate the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... progress towards complete satisfaction of a performance obligation B14 Methods that can be used to measure an entity s progress towards complete satisfaction of a performance obligation satisfied over time in accordance with paragraphs 35 37 include the following: (a) output methods (see paragraphs B15 B17); and (b) input methods (see paragraphs B18 B19). Output methods B15 Output methods recognise revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract. Output methods include methods such as surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed and units produced or units delivered. When an entity evaluates whether to apply an output method to measure its progress, the entity shall consider whether the output selected would faithfully depict the entity s performance towards complete satisfaction of the performance obligation. An output method would not provide a faithful depiction of the entity s performance if the output selected would fail to measure some of the goods or ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table to significant inefficiencies in the entity s performance that were not reflected in the price of the contract (for example, the costs of unexpected amounts of wasted materials, labour or other resources that were incurred to satisfy the performance obligation). (b) When a cost incurred is not proportionate to the entity s progress in satisfying the performance obligation. In those circumstances, the best depiction of the entity s performance may be to adjust the input method to recognise revenue only to the extent of that cost incurred. For example, a faithful depiction of an entity s performance might be to recognise revenue at an amount equal to the cost of a good used to satisfy a performance obligation if the entity expects at contract inception that all of the following conditions would be met: (i) the good is not distinct; (ii) the customer is expected to obtain control of the good significantly before receiving services related to the good; (iii) the cost of the transferred good is significant relative to the total expected costs to completely satisfy the performance obligation; and (iv) the entity procures the good from a third party and is not signifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Subsequently, at the end of each reporting period, the entity shall update its assessment of amounts for which it expects to be entitled in exchange for the transferred products and make a corresponding change to the transaction price and, therefore, in the amount of revenue recognised. B24 An entity shall update the measurement of the refund liability at the end of each reporting period for changes in expectations about the amount of refunds. An entity shall recognise corresponding adjustments as revenue (or reductions of revenue). B25 An asset recognised for an entity s right to recover products from a customer on settling a refund liability shall initially be measured by reference to the former carrying amount of the product (for example, inventory) less any expected costs to recover those products (including potential decreases in the value to the entity of returned products). At the end of each reporting period, an entity shall update the measurement of the asset arising from changes in expectations about products to be returned. An entity shall present the asset separately from the refund liability. B26 Exchanges by customers of one product for another of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect customers from the risk of purchasing defective products. (b) The length of the warranty coverage period-the longer the coverage period, the more likely it is that the promised warranty is a performance obligation because it is more likely to provide a service in addition to the assurance that the product complies with agreed-upon specifications. (c) The nature of the tasks that the entity promises to perform-if it is necessary for an entity to perform specified tasks to provide the assurance that a product complies with agreed-upon specifications (for example, a return shipping service for a defective product), then those tasks likely do not give rise to a performance obligation. B32 If a warranty, or a part of a warranty, provides a customer with a service in addition to the assurance that the product complies with agreed-upon specifications, the promised service is a performance obligation. Therefore, an entity shall allocate the transaction price to the product and the service. If an entity promises both an assurance-type warranty and a service-type warranty but cannot reasonably account for them separately, the entity shall account for both of the warranties toget ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance obligation to provide the specified good or service itself or it may engage another party (for example, a subcontractor) to satisfy some or all of the performance obligation on its behalf. B35A When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of any one of the following: (a) a good or another asset from the other party that it then transfers to the customer. (b) a right to a service to be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on the entity s behalf. (c) a good or service from the other party that it then combines with other goods or services in providing the specified good or service to the customer. For example, if an entity provides a significant service of integrating goods or services (see paragraph 29(a)) provided by another party into the specified good or service for which the customer has contracted, the entity controls the specified good or service before that good or service is transferred to the customer. This is because the entity first obtains control of the inputs to the specified good or serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the remaining benefits from, the good or service before it is transferred to the customer. (c) the entity has discretion in establishing the price for the specified good or service. Establishing the price that the customer pays for the specified good or service may indicate that the entity has the ability to direct the use of that good or service and obtain substantially all of the remaining benefits. However, an agent can have discretion in establishing prices in some cases. For example, an agent may have some flexibility in setting prices in order to generate additional revenue from its service of arranging for goods or services to be provided by other parties to customers. B37A The indicators in paragraph B37 may be more or less relevant to the assessment of control depending on the nature of the specified good or service and the terms and conditions of the contract. In addition, different indicators may provide more persuasive evidence in different contracts. B38 If another entity assumes the entity s performance obligations and contractual rights in the contract so that the entity is no longer obliged to satisfy the performance obligation to transfer the specified g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion; and (b) the likelihood that the option will be exercised. B43 If a customer has a material right to acquire future goods or services and those goods or services are similar to the original goods or services in the contract and are provided in accordance with the terms of the original contract, then an entity may, as a practical alternative to estimating the stand-alone selling price of the option, allocate the transaction price to the optional goods or services by reference to the goods or services expected to be provided and the corresponding expected consideration. Typically, those types of options are for contract renewals. Customers unexercised rights B44 In accordance with paragraph 106, upon receipt of a prepayment from a customer, an entity shall recognise a contract liability in the amount of the prepayment for its performance obligation to transfer, or to stand ready to transfer, goods or services in the future. An entity shall derecognise that contract liability (and recognise revenue) when it transfers those goods or services and, therefore, satisfies its performance obligation. B45 A customer s non-refundable prepayment to an entity gives the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph B40. B50 If the non-refundable upfront fee relates to a good or service, the entity shall evaluate whether to account for the good or service as a separate performance obligation in accordance with paragraphs 22 30. B51 An entity may charge a non-refundable fee in part as compensation for costs incurred in setting up a contract (or other administrative tasks as described in paragraph 25). If those setup activities do not satisfy a performance obligation, the entity shall disregard those activities (and related costs) when measuring progress in accordance with paragraph B19. That is because the costs of setup activities do not depict the transfer of services to the customer. The entity shall assess whether costs incurred in setting up a contract have resulted in an asset that shall be recognised in accordance with paragraph 95. Licensing B52 A licence establishes a customer s rights to the intellectual property of an entity. Licences of intellectual property may include, but are not limited to, licences of any of the following: (a) software and technology; (b) motion pictures, music and other forms of media and entertainment; (c) franchises; and (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romise B57 * B58 The nature of an entity s promise in granting a licence is a promise to provide a right to access the entity s intellectual property if all of the following criteria are met: (a) the contract requires, or the customer reasonably expects, that the entity will undertake activities that significantly affect the intellectual property to which the customer has rights (see paragraph B59 and B59A); (b) the rights granted by the licence directly expose the customer to any positive or negative effects of the entity s activities identified in paragraph B58(a); and (c) those activities do not result in the transfer of a good or a service to the customer as those activities occur (see paragraph 25). B59 Factors that may indicate that a customer could reasonably expect that an entity will undertake activities that significantly affect the intellectual property include the entity s customary business practices, published policies or specific statements. Although not determinative, the existence of a shared economic interest (for example, a sales-based royalty) between the entity and the customer related to the intellectual property to which the customer has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from, the licence at the point in time at which the licence transfers. An entity shall account for the promise to provide a right to use the entity s intellectual property as a performance obligation satisfied at a point in time. An entity shall apply paragraph 38 to determine the point in time at which the licence transfers to the customer. However, revenue cannot be recognised for a licence that provides a right to use the entity s intellectual property before the beginning of the period during which the customer is able to use and benefit from the licence. For example, if a software licence period begins before an entity provides (or otherwise makes available) to the customer a code that enables the customer to immediately use the software, the entity would not recognise revenue before that code has been provided (or otherwise made available). B62 An entity shall disregard the following factors when determining whether a licence provides a right to access the entity s intellectual property or a right to use the entity s intellectual property: (a) Restrictions of time, geographical region or use-those restrictions define the attributes of the promised licence, rather than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally come in three forms: (a) an entity s obligation to repurchase the asset (a forward); (b) an entity s right to repurchase the asset (a call option); and (c) an entity s obligation to repurchase the asset at the customer s request (a put option). A forward or a call option B66 If an entity has an obligation or a right to repurchase the asset (a forward or a call option), a customer does not obtain control of the asset because the customer is limited in its ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset even though the customer may have physical possession of the asset. Consequently, the entity shall account for the contract as either of the following: (a) a lease in accordance with Ind AS 17, Leases, if the entity can or must repurchase the asset for an amount that is less than the original selling price of the asset; or (b) a financing arrangement in accordance with paragraph B68 if the entity can or must repurchase the asset for an amount that is equal to or more than the original selling price of the asset. B67 When comparing the repurchase price with the selling price, an entity shall consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o or greater than the original selling price and is less than or equal to the expected market value of the asset, and the customer does not have a significant economic incentive to exercise its right, then the entity shall account for the agreement as if it were the sale of a product with a right of return as described in paragraphs B20 B27. B75 When comparing the repurchase price with the selling price, an entity shall consider the time value of money. B76 If the option lapses unexercised, an entity shall derecognise the liability and recognise revenue. Consignment arrangements B77 When an entity delivers a product to another party (such as a dealer or a distributor) for sale to end customers, the entity shall evaluate whether that other party has obtained control of the product at that point in time. A product that has been delivered to another party may be held in a consignment arrangement if that other party has not obtained control of the product. Accordingly, an entity shall not recognise revenue upon delivery of a product to another party if the delivered product is held on consignment. B78 Indicators that an arrangement is a consignment arrangement include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to use the product or to direct it to another customer. B82 If an entity recognises revenue for the sale of a product on a bill-and-hold basis, the entity shall consider whether it has remaining performance obligations (for example, for custodial services) in accordance with paragraphs 22 30 to which the entity shall allocate a portion of the transaction price in accordance with paragraphs 73 86. Customer acceptance B83 In accordance with paragraph 38(e), a customer s acceptance of an asset may indicate that the customer has obtained control of the asset. Customer acceptance clauses allow a customer to cancel a contract or require an entity to take remedial action if a good or service does not meet agreed-upon specifications. An entity shall consider such clauses when evaluating when a customer obtains control of a good or service. B84 If an entity can objectively determine that control of a good or service has been transferred to the customer in accordance with the agreed-upon specifications in the contract, then customer acceptance is a formality that would not affect the entity s determination of when the customer has obtained control of the good or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther purposes, including all of the following: (a) disclosures presented outside the financial statements (for example, in earnings releases, annual reports or investor presentations); (b) information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments; and (c) other information that is similar to the types of information identified in paragraph B88(a) and (b) and that is used by the entity or users of the entity s financial statements to evaluate the entity s financial performance or make resource allocation decisions. B89 Examples of categories that might be appropriate include, but are not limited to, all of the following: (a) type of good or service (for example, major product lines); (b) geographical region (for example, country or region); (c) market or type of customer (for example, government and non-government customers); (d) type of contract (for example, fixed-price and time-and-materials contracts); (e) contract duration (for example, short-term and long-term contracts); (f) timing of transfer of goods or services (for example, revenue from goods or services transferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparative reporting periods. (c) for contracts that were modified before the beginning of the earliest period presented, an entity need not retrospectively restate the contract for those contract modifications in accordance with paragraphs 20 21. Instead, an entity shall reflect the aggregate effect of all of the modifications that occur before the beginning of the earliest period presented when: (i) identifying the satisfied and unsatisfied performance obligations; (ii) determining the transaction price; and (iii) allocating the transaction price to the satisfied and unsatisfied performance obligations. (d) for all reporting periods presented before the date of initial application, an entity need not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the entity expects to recognise that amount as revenue (see paragraph 120). C6 For any of the practical expedients in paragraph C5 that an entity uses, the entity shall apply that expedient consistently to all contracts within all reporting periods presented. In addition, the entity shall disclose all of the following information: (a) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... budget appropriation. 2 In recent times, governments have introduced contractual service arrangements to attract private sector participation in the development, financing, operation and maintenance of such infrastructure. The infrastructure may already exist, or may be constructed during the period of the service arrangement. An arrangement within the scope of this Appendix typically involves a private sector entity (an operator) constructing the infrastructure used to provide the public service or upgrading it (for example, by increasing its capacity) and operating and maintaining that infrastructure for a specified period of time. The operator is paid for its services over the period of the arrangement. The arrangement is governed by a contract that sets out performance standards, mechanisms for adjusting prices, and arrangements for arbitrating disputes. Such an arrangement is often described as a build-operate-transfer , a rehabilitate-operate-transfer or a public-to-private service concession arrangement. 3 A feature of these service arrangements is the public service nature of the obligation undertaken by the operator. Public policy is for the services related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for infrastructure that was held and recognised as property, plant and equipment by the operator before entering the service arrangement. The derecognition requirements of Ind ASs (as set out in Ind AS 16) apply to such infrastructure. 9 This Appendix does not specify the accounting by grantors. Issues 10 This Appendix sets out general principles on recognising and measuring the obligations and related rights in service concession arrangements. Requirements for disclosing information about service concession arrangements are in Appendix E to this Indian Accounting Standard. The issues addressed in this Appendix are: (a) treatment of the operator s rights over the infrastructure; (b) recognition and measurement of arrangement consideration; (c) construction or upgrade services; (d) operation services; (e) borrowing costs; (f) subsequent accounting treatment of a financial asset and an intangible asset; and (g) items provided to the operator by the grantor. Accounting Principles Treatment of the operator s rights over the infrastructure 11 Infrastructure within the scope of this Appendix shall not be recognised as property, plant and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a licence) to charge users of the public service. A right to charge users of the public service is not an unconditional right to receive cash because the amounts are contingent on the extent that the public uses the service. 18 If the operator is paid for the construction services partly by a financial asset and partly by an intangible asset it is necessary to account separately for each component of the operator s consideration. The consideration received or receivable for both components shall be recognised initially in accordance with Ind AS 115. 19 The nature of the consideration given by the grantor to the operator shall be determined by reference to the contract terms and, when it exists, relevant contract law. The nature of the consideration determines the subsequent accounting as described in paragraphs 23 26 of this Appendix. However, both types of consideration are classified as a contract asset during the construction or upgrade period in accordance with Ind AS 115. Operation services 20 The operator shall account for operation services in accordance with Ind AS 115. Contractual obligations to restore the infrastructure to a specified level of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or may also provide other items to the operator that the operator can keep or deal with as it wishes. If such assets form part of the consideration payable by the grantor for the services, they are not government grants as defined in Ind AS 20.Instead, they are accounted for as part of the transaction price as defined in Ind AS 115. Application Guidance on Appendix D This Application Guidance is an integral part of Appendix D Scope (paragraph 5 of Appendix D) AG1 Paragraph 5 of Appendix D specifies that infrastructure is within the scope of the Appendix when the following conditions apply: (a) the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and at what price; and (b) the grantor controls-through ownership, beneficial entitlement or otherwise-any significant residual interest in the infrastructure at the end of the term of the arrangement. AG2 The control or regulation referred to in condition (a) could be by contract or otherwise (such as through a regulator), and includes circumstances in which the grantor buys all of the output as well as those in which some or all of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest in the final replacement of that part. AG7 Sometimes the use of infrastructure is partly regulated in the manner described in paragraph 5(a) of Appendix D and partly unregulated. However, these arrangements take a variety of forms: (a) any infrastructure that is physically separable and capable of being operated independently and meets the definition of a cash-generating unit as defined in Ind AS 36 shall be analysed separately if it is used wholly for unregulated purposes. For example, this might apply to a private wing of a hospital, where the remainder of the hospital is used by the grantor to treat public patients. (b) when purely ancillary activities (such as a hospital shop) are unregulated, the control tests shall be applied as if those services did not exist, because in cases in which the grantor controls the services in the manner described in paragraph 5 of Appendix D, the existence of ancillary activities does not detract from the grantor s control of the infrastructure. AG8 The operator may have a right to use the separable infrastructure described in paragraph AG7(a), or the facilities used to provide ancillary unregulated services described in paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions during the concession period, and (d) when applicable, committing to return at the end of the concession period the rights received at the beginning of the concession period and/or acquired during the concession period. 3 The common characteristic of all service concession arrangements is that the operator both receives a right and incurs an obligation to provide public services. 4 The issue is what information should be disclosed in the notes in the financial statements of an operator and a grantor. 5 Certain aspects and disclosures relating to some service concession arrangements are addressed by Indian Accounting Standards (eg Ind AS 16 applies to acquisitions of items of property, plant and equipment, Ind AS 17 applies to leases of assets, and Ind AS 38 applies to acquisitions of intangible assets). However, a service concession arrangement may involve executory contracts that are not addressed in Indian Accounting Standards, unless the contracts are onerous, in which case Ind AS 37 applies. Therefore, this Appendix addresses additional disclosures of service concession arrangements. Accounting Principles 6 All aspects of a service concession ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national Financial Reporting Standard (IFRS) 15, Revenue from Contracts with Customers, IFRIC 12, Service Concession Arrangements and SIC 29 Service Concession Arrangements: Disclosures, issued by the International Accounting Standards Board. Comparison with IFRS 15, Revenue from Contracts with Customers, IFRIC 12 and SIC 29 1. Different terminology is used in Ind AS 115 eg the term balance sheet is used instead of statement of financial position and statement of profit and loss is used instead of statement of comprehensive income . 2. As per paragraph of 15 of IFRS 15, an amount of consideration, among other things, can vary because of penalties. However, paragraph 51 of Ind AS 115 has been amended to exclude penalties from the list of examples given in the paragraph 51 due to which an amount of consideration can vary. However, paragraph 51AA has been inserted to explain the accounting treatment of penalties . 3. Paragraph 109AA has been inserted to require an entity to present separately the amount of excise duty included in the revenue recognised in the statement of profit and loss. 4. Paragraph 126AA has been inserted to present reconciliation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing expenses; and (b) an entity may net expenditure related to a provision that is recognised in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets, and reimbursed under a contractual arrangement with a third party (for example, a supplier s warranty agreement) against the related reimbursement. ; (ii) after paragraph 138, the following shall be inserted, namely,- Transition and Effective Date 139 * 139A * 139B * 139C * 139D * 139E * 139F * 139G * 139H * 139I * 139J * 139K * 139L * 139M * 139N As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers , paragraph 34 is amended. An entity shall apply those amendments when it applies Ind AS 115. ; (iii) in Appendix 1, after paragraph 9, the following paragraph shall be inserted, namely,- 10. Paragraphs 139 to 139M related to Transition and Effective Date have not been included in Ind AS 1 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 1, these paragraph numbers are retained in Ind AS 1. ; IX. in Indian Accounting Standard (Ind AS) 2 , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs , paragraphs 2, 8, 29, 37 are amended. An entity shall apply those amendments when it applies Ind AS 115. (viii) in Appendix 1, after paragraph 1, the following paragraphs shall be inserted, namely:-. 2. Following paragraph numbers appear as Deleted in IAS 2.. In order to maintain consistency with paragraph numbers of IAS 2, the paragraph numbers are retained in Ind AS 2: (i) Paragraph 2 (a) (ii) Paragraph 19. 3. Paragraphs 40 to 40D related to effective date have not been included in Ind AS 2 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 2, these paragraph numbers are retained in Ind AS 2. ; X. in Indian Accounting Standard (Ind AS) 8 , - (i) in Appendix A, the existing paragraph shall be numbered as paragraph 1 and after paragraph 1 as so re-numbered the following paragraph shall be inserted, namely:- 2. Appendix B, Foreign Currency Transactions and Advance Consideration , contained in Ind AS 21, The Effects of Changes in Foreign Exchange Rates, makes reference to Ind AS 8. ; XI. Indian Accounting Standard (Ind AS) 11 shall be omitted; XII. in Indian Accounting Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctible temporary difference, it considers whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. If tax law imposes no such restrictions, an entity assesses a deductible temporary difference in combination with all of its other deductible temporary differences. However, if tax law restricts the utilisation of losses to deduction against income of a specific type, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. ; (iii) for paragraph 29, the following paragraph shall be substituted, namely:- 29 When there are insufficient taxable temporary differences relating to the same taxation authority and the same taxable entity, the deferred tax asset is recognised to the extent that: (a) it is probable that the entity will have sufficient taxable profit relating to the same taxation authority and the same taxable entity in the same period as the reversal of the deductible temporary difference (or in the periods into which a tax loss arising from the deferred tax asset can be carried back or forward). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndments to Ind AS 12) amended paragraph 29 and added paragraphs 27A, 29A and 89-98F and the example following paragraph 26. An entity shall apply those amendments for annual periods beginning on or after April 01, 2018. An entity shall apply those amendments retrospectively in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors . However, on initial application of the amendment, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. If an entity applies this relief, it shall disclose that fact. ; (vii) in Appendix 1,- (a) after paragraph 7, following paragraph shall be inserted, namely,- 8. Paragraphs 89 to 98D and 98F of IAS 12 related to effective date have not been included in Ind AS 12 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 12, these paragraph numbers are retained in Ind AS 12. ; XIII. in Indian Accounting Standard (Ind AS) 16 ,- (i) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions related to Ind ASs, wherever considered appropriate have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards. Paragraphs 81 to 81I related to effective date have not been included in Ind AS 16 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 16, these paragraph numbers are retained in Ind AS 16. ; (vi) in Appendix C, (a) for paragraph 1, the following paragraph shall be substituted, namely:- 1. Appendix D, Service Concession Arrangements contained in Ind AS 115, Revenue from Contracts with Customers . ; (b) for paragraph 2, the following paragraph shall be substituted, namely:- 2. Appendix E, Service Concession Arrangements: Disclosures contained in Ind AS 115, Revenue from Contracts with Customers . ; XIV. in Indian Accounting Standard (Ind AS) 17 ,- (i) in Appendix B, in paragraph 8, for the opening paragraph starting with The requirements in and ending with is inappropriate include: , the following shall be substituted, namely:- 8. The requirements in Ind AS 115, Revenue from Contracts with Customers, shall be applied to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e related asset, expense or income (or part of it) is the amount recognised applying relevant Standards, which results in the derecognition of the non-monetary asset or non-monetary liability arising from the advance consideration. 3 Initially, the issue was how to determine the date of the transaction applying paragraphs 21 -22 of Ind AS 21 when recognising revenue. The question specifically addressed circumstances in which an entity recognises a non-monetary liability arising from the receipt of advance consideration before it recognises the related revenue. It was noted that the receipt or payment of advance consideration in a foreign currency is not restricted to revenue transactions. Accordingly, this appendix clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income when an entity has received or paid advance consideration in a foreign currency. Scope 4 This Appendix applies to a foreign currency transaction (or part of it) when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix. A3 An entity that applies paragraph A2(b) shall, on initial application, apply the Appendix to assets, expenses and income initially recognised on or after the beginning of the reporting period in paragraph A2(b)(i) or (ii) for which the entity has recognised non-monetary assets or non-monetary liabilities arising from advance consideration before that date. ; (ii) in Appendix 1, - (a) in the related Note , after the words Exchange Rates, and before the words issued by the words and IFRIC 22 Foreign Currency Transactions and Advance Consideration shall be inserted. (b) in the heading, after the words Exchange Rates , and IFRIC 22 shall be inserted. XVII. in Indian Accounting Standard (Ind AS) 23 , in Appendix A, for paragraph 2, the following paragraph shall be substituted, namely:- 2. Appendix D, Service Concession Arrangements contained in Ind AS 115, Revenue from Contracts with Customers , makes reference to this Standard also. ; XVIII. in Indian Accounting Standard (Ind AS) 28 , - (i) for paragraph 18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * 97 * 97A * 97B * 97C * 97D * 97E * 97F * 97G * 97H * 97I * 97J * 97K * 97L * 97M * 97N * 97O * 97P * 97Q As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers , paragraph AG21 is amended. An entity shall apply those amendments when it applies Ind AS 115. ; (ii) in Appendix A, for paragraph AG21, the following paragraph shall be substituted, namely:- AG21 Except as required by Ind AS 115, Revenue from Contracts with Customers, a contract that involves the receipt or delivery of physical assets does not give rise to a financial asset of one party and a financial liability of the other party unless any corresponding payment is deferred past the date on which the physical assets are transferred. Such is the case with the purchase or sale of goods on trade credit. ; (iii) in Appendix B, for paragraph 1, the following paragraph shall be substituted, namely:- 1. Appendix D, Service Concession Arrangements contained in Ind AS 115, Revenue from Contracts with Customers . ; (iv) in Appendix 1, paragraph 2 shall be substituted, namely,- 2. Paragraphs 96 to 97P related to Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140C * 140D * 140E * 140F * 140G * 140H * 140I * 140J * 140K * 140L As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers , paragraph 2 is amended. An entity shall apply those amendments when it applies Ind AS 115. ; (iii) in Appendix 1, after paragraph 7, the following paragraph shall be inserted, namely:- 8. Paragraphs 138 to 140K related to effective date have not been included in Ind AS 36 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 36, these paragraph numbers are retained in Ind AS 36. ; XXII. in Indian Accounting Standard (Ind AS) 37 : - (i) for paragraph 5, the following paragraph shall be substituted, namely:- 5. When another Standard deals with a specific type of provision, contingent liability or contingent asset, an entity applies that Standard instead of this Standard. For example, some types of provisions are addressed in Standards on: (a) Omitted*; (b) income taxes (see Ind AS 12, Income Taxes ); (c) leases (see Ind AS 17, Leases ). However, as Ind AS 17 contains no specific requirements to deal with operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and paragraph related to Effective date are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 37, these paragraph numbers are retained in Ind AS 37. ; XXIII. in Indian Accounting Standard (Ind AS) 38 ,- (i) in paragraph 3, for item (a), the following item shall be substituted, namely:- (a) intangible assets held by an entity for sale in the ordinary course of business (see Ind AS 2, Inventories ). ; (ii) in paragraph 3, after item (h), following item shall be inserted, namely:-. (i) assets arising from contracts with customers that are recognised in accordance with Ind AS 115, Revenue from Contracts with Customers . ; (iii) for paragraph 114, the following paragraph shall be substituted, namely:- 114 The disposal of an intangible asset may occur in a variety of ways (eg by sale, by entering into a finance lease, or by donation). The date of disposal of an intangible asset is the date that the recipient obtains control of that asset in accordance with the requirements for determining when a performance obligation is satisfied in Ind AS 115, Revenue from Contracts with Customers . Ind AS 17 applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 have not been given in Ind AS 38, since all transitional provisions related to Ind ASs, wherever considered appropriate, have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards, corresponding to IFRS 1, First-time Adoption of International Financial Reporting Standards and paragraphs related to Effective date are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IAS 38, these paragraph numbers are retained in Ind AS 38. ; XXIV. in Indian Accounting Standard (Ind AS) 40 , (i) in paragraph 3, for item (b), the following item shall be substituted namely:- (b) recognition of lease income from investment property (see also Ind AS 115, Revenue from Contracts with Customers ); ; (ii) in paragraph 9, item (b) shall be omitted; (iii) for paragraph 57, the following paragraph shall be substituted, namely:- 57 An entity shall transfer a property to, or from, investment property when, and only when, there is a change in use. A change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. In isolation, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Provisions 80 * 81 * 82 * 83 * 84 * 84A * 84B * Transfers of investment property 84C Transfers of Investment Property (Amendments to Ind AS 40), amended paragraphs 57 58. An entity shall apply those amendments to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments (the date of initial application). At the date of initial application, an entity shall reassess the classification of property held at that date and, if applicable, reclassify property applying paragraphs 7 14 to reflect the conditions that exist at that date. 84D Notwithstanding the requirements in paragraph 84C, an entity is permitted to apply the amendments to paragraphs 57 58 retrospectively in accordance with Ind AS 8 if, and only if, that is possible without the use of hindsight. 84E If, in accordance with paragraph 84C, an entity reclassifies property at the date of initial application, the entity shall: (a) account for the reclassification applying the requirements in paragraph 59. (i) * (ii) * (b) disclose the amounts reclassified to, or from, investment property in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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