TaxTMI 
TaxTMI 
Companies (Indian Accounting Standards) Amendment Rules, 2018
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....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....
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....raph shall be substituted namely;- "14. Paragraphs 34 to 39W and 39Y to 39AB have not been included in Ind AS 101 as these paragraphs relate to effective date and are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 1, these paragraph numbers have been 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....
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....sting accounting policies for these contracts unless they involve practices prohibited by paragraph 14 and (ii) to improve its accounting policies if so permitted by paragraphs 22-30.''; (b) in paragraph B18, for item (h), the following item shall be substituted, namely:- ''(h) product warranties. Product warranties issued by another party for goods sold by a manufacturer, dealer or retailer are within the scope of this Ind AS. However, product warranties issued directly by a manufacturer, dealer or retailer are outside its scope, 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....
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.....1, the following paragraph shall be substituted, namely:- ''5.1.1 Except for trade receivables within the scope of paragraph 5.1.3, at initial recognition, an entity shall measure a financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.''; (v) after paragraph 5.1.2, the following paragraph shall be inserted, namely:- "5.1.3 Despite the requirement in paragraph 5.1.1, at initial recognition, 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 par....
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....th Customers, specifies are accounted for in accordance with this Standard for the purposes of recognising and measuring impairment gains or losses." ; (b) after the definition 'transaction costs', the following paragraph shall be substituted, namely:- ''The following terms are defined in paragraph 11 of Ind AS 32, Appendix A of Ind AS 107, Appendix A of Ind AS 113 or Appendix A of Ind AS 115 and are used in this Standard with the meanings specified in Ind AS 32, Ind AS 107, Ind AS 113 or Ind AS 115: (a) credit risk;^1 (b) equity instrument; (c) fair value; (d) financial asset; (e) financial instrument; (f) financial liability; (g) transaction price.'' ; 1 This term (as defined in 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....
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....t a specific lending arrangement will be entered into; and (c) loan syndication fees received by an entity that arranges a loan and retains no part of the loan package for itself (or retains a part at the same effective interest rate for comparable risk as other participants).'' ; (xi) in Appendix E, 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. ''; (xii) in Appendix 1, for paragraph 3 the following paragraph shall be substituted, namely:- " 3. Paragraphs 7.1.1 to 7.1.3 related to effective date have not been included in Ind AS 109 as these paragraphs are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 9, these paragraph numbers are retained 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 classif....
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....amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. Meeting the objective 2 To meet the objective in paragraph 1, the core principle of this Standard is that an entity shall 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. 3 An entity shall consider the terms of the contract and all relevant facts and circumstances when applying this Standard. An entity shall apply this Standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances. 4 This Standard specifies the accounting for an individual contract with a customer. However, as a practical expedient, an entity may apply this Standard to a portfolio of contracts (or performance obligations) with similar characteristics 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 cont....
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....Standards and shall apply paragraphs 73-86 to allocate the amount of the transaction price that remains (if any) to each performance obligation within the scope of this Standard and to any other parts of the contract identified by paragraph 7(b). (b) If the other Standards do not specify how to separate and/or initially measure one or more parts of the contract, then the entity shall apply this Standard to separate and/or initially measure the part (or parts) of the contract. 8 This Standard specifies the accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfil a contract with a customer if those costs are not within the scope of another Standard (see paragraphs 91-104). An entity shall apply those paragraphs only to the costs incurred that relate to a contract with a customer (or part of that contract) that is within the scope of this Standard. Recognition Identifying the contract 9 An entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met: (a) the parties to the contract have approved ....
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....enforceable right to terminate a wholly unperformed contract without compensating the other party (or parties). A contract is wholly unperformed if both of the following criteria are met: (a) the entity has not yet transferred any promised goods or services to the customer; and (b) the entity has not yet received, and is not yet entitled to receive, any consideration in exchange for promised goods or services. 13 If a contract with a customer meets the criteria in paragraph 9 at contract inception, an entity shall not reassess those criteria unless there is an indication of a significant change in facts and circumstances. For example, if a customer's ability to pay the consideration deteriorates significantly, an entity would reassess whether it is probable that the entity will collect the consideration to which the entity will be entitled in exchange for the remaining goods or services that will be transferred to the customer. 14 If a contract with a customer does not meet the criteria in paragraph 9, an entity shall continue to assess the contract to determine whether the criteria in paragraph 9 are subsequently met. 15 When a contract....
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....ment or implied by customary business practices. If the parties to the contract have not approved a contract modification, an entity shall continue to apply this Standard to the existing contract until the contract modification is approved. 19 A contract modification may exist even though the parties to the contract have a dispute about the scope or price (or both) of the modification or the parties have approved a change in the scope of the contract but have not yet determined the corresponding change in price. In determining whether the rights and obligations that are created or changed by a modification are enforceable, an entity shall consider all relevant facts and circumstances including the terms of the contract and other evidence. If the parties to a contract have approved a change in the scope of the contract but have not yet determined the corresponding change in price, an entity shall estimate the change to the transaction price arising from the modification in accordance with paragraphs 50-54 on estimating variable consideration and paragraphs 56-58 on constraining estimates of variable consideration. 20 An entity shall account for a contract modificat....
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....isfaction of the performance obligation, is recognised as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (ie the adjustment to revenue is made on a cumulative catch-up basis). (c) If the remaining goods or services are a combination of items (a) and (b), then the entity shall account for the effects of the modification on the unsatisfied (including partially unsatisfied) performance obligations in the modified contract in a manner that is consistent with the objectives of this paragraph. Identifying performance obligations 22 At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either: (a) a good or service (or a bundle of goods or services) that is distinct; or (b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer (see paragraph 23). 23 A series of distinct goods or services has the same pattern of transfer to the customer if both of the f....
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....e basis) or of making goods or services available for a customer to use as and when the customer decides; (f) providing a service of arranging for another party to transfer goods or services to a customer (for example, acting as an agent of another party, as described in paragraphs B34-B38); (g) granting rights to goods or services to be provided in the future that a customer can resell or provide to its customer (for example, an entity selling a product to a retailer promises to transfer an additional good or service to an individual who purchases the product from the retailer); (h) constructing, manufacturing or developing an asset on behalf of a customer; (i) granting licences (see paragraphs B52-B63B); and (j) granting options to purchase additional goods or services (when those options provide a customer with a material right, as described in paragraphs B39-B43). 27 A good or service that is promised to a customer is distinct if both of the following criteria are met: (a) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (....
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.... goods or services as inputs to produce or deliver the combined output or outputs specified by the customer. A combined output or outputs might include more than one phase, element or unit. (b) one or more of the goods or services significantly modifies or customises, or are significantly modified or customised by, one or more of the other goods or services promised in the contract. (c) the goods or services are highly interdependent or highly interrelated. In other words, each of the goods or services is significantly affected by one or more of the other goods or services in the contract. For example, in some cases, two or more goods or services are significantly affected by each other because the entity would not be able to fulfil its promise by transferring each of the goods or services independently. 30 If a promised good or service is not distinct, an entity shall combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. In some cases, that would result in the entity accounting for all the goods or services promised in a contract as a single performance obligation. ....
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.... enhanced (see paragraph B5); or (c) the entity's performance does not create an asset with an alternative use to the entity (see paragraph 36) and the entity has an enforceable right to payment for performance completed to date (see paragraph 37). 36 An asset created by an entity's performance does not have an alternative use to an entity if the entity is either restricted contractually from readily directing the asset for another use during the creation or enhancement of that asset or limited practically from readily directing the asset in its completed state for another use. The assessment of whether an asset has an alternative use to the entity is made at contract inception. After contract inception, an entity shall not update the assessment of the alternative use of an asset unless the parties to the contract approve a contract modification that substantively changes the performance obligation. Paragraphs B6-B8 provide guidance for assessing whether an asset has an alternative use to an entity. 37 An entity shall consider the terms of the contract, as well as any laws that apply to the contract, when evaluating whether it has an enforceable right to ....
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....from, the asset or to restrict the access of other entities to those benefits. However, physical possession may not coincide with control of an asset. For example, in some repurchase agreements and in some consignment arrangements, a customer or consignee may have physical possession of an asset that the entity controls. Conversely, in some bill-and-hold arrangements, the entity may have physical possession of an asset that the customer controls. Paragraphs B64-B76, B77-B78 and B79-B82 provide guidance on accounting for repurchase agreements, consignment arrangements and bill-and-hold arrangements, respectively. (d) The customer has the significant risks and rewards of ownership of the asset-the transfer of the significant risks and rewards of ownership of an asset to the customer may indicate that the customer has obtained the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. However, when evaluating the risks and rewards of ownership of a promised asset, an entity shall exclude any risks that give rise to a separate performance obligation in addition to the performance obligation to transfer the asset. For example, an e....
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....nge over time, an entity shall update its measure of progress to reflect any changes in the outcome of the performance obligation. Such changes to an entity's measure of progress shall be accounted for as a change in accounting estimate in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. Reasonable measures of progress 44 An entity shall recognise revenue for a performance obligation satisfied over time only if the entity can reasonably measure its progress towards complete satisfaction of the performance obligation. An entity would not be able to reasonably measure its progress towards complete satisfaction of a performance obligation if it lacks reliable information that would be required to apply an appropriate method of measuring progress. 45 In some circumstances (for example, in the early stages of a contract), an entity may not be able to reasonably measure the outcome of a performance obligation, but the entity expects to recover the costs incurred in satisfying the performance obligation. In those circumstances, the entity shall recognise revenue only to the extent of the costs incurred until such time th....
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....nce or non-occurrence of a future event. For example, an amount of consideration would be variable if either a product was sold with a right of return or a fixed amount is promised as a performance bonus on achievement of a specified milestone. 51AA In some contracts, penalties are specified. In such cases, penalties shall be accounted for as per the substance of the contract. Where the penalty is inherent in determination of transaction price, it shall form part of variable consideration. For example, where an entity agrees to transfer control of a good or service in a contact with customer at the end of 30 days for Rs. 1,00,000 and if it exceeds 30 days, the entity is entitled to receive only Rs. 95,000, the reduction of Rs. 5,000 shall be regarded as variable consideration. In other cases, the transaction price shall be considered as fixed. 52 The variability relating to the consideration promised by a customer may be explicitly stated in the contract. In addition to the terms of the contract, the promised consideration is variable if either of the following circumstances exists: (a) the customer has a valid expectation arising from an entity's customa....
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....y is measured at the amount of consideration received (or receivable) for which the entity does not expect to be entitled (ie amounts not included in the transaction price). The refund liability (and corresponding change in the transaction price and, therefore, the contract liability) shall be updated at the end of each reporting period for changes in circumstances. To account for a refund liability relating to a sale with a right of return, an entity shall apply the guidance in paragraphs B20-B27. Constraining estimates of variable consideration 56 An entity shall include in the transaction price some or all of an amount of variable consideration estimated in accordance with paragraph 53 only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. 57 In assessing whether it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur once the uncertainty related to the variable consideration is subsequently resolved, an entity shall consider bot....
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.... the contract or implied by the payment terms agreed to by the parties to the contract. 61 The objective when adjusting the promised amount of consideration for a significant financing component is for an entity to recognise revenue at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer (ie the cash selling price). An entity shall consider all relevant facts and circumstances in assessing whether a contract contains a financing component and whether that financing component is significant to the contract, including both of the following: (a) the difference, if any, between the amount of promised consideration and the cash selling price of the promised goods or services; and (b) the combined effect of both of the following: (i) the expected length of time between when the entity transfers the promised goods or services to the customer and when the customer pays for those goods or services; and (ii) the prevailing interest rates in the relevant market. 62 Notwithstanding the assessme....
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....terest rates or other circumstances (such as a change in the assessment of the customer's credit risk). 65 An entity shall present the effects of financing (interest revenue or interest expense) separately from revenue from contracts with customers in the statement of profit and loss. Interest revenue or interest expense is recognised only to the extent that a contract asset (or receivable) or a contract liability is recognised in accounting for a contract with a customer. Non-cash consideration 66 To determine the transaction price for contracts in which a customer promises consideration in a form other than cash, an entity shall measure the non-cash consideration (or promise of non-cash consideration) at fair value. 67 If an entity cannot reasonably estimate the fair value of the non-cash consideration, the entity shall measure the consideration indirectly by reference to the stand-alone selling price of the goods or services promised to the customer (or class of customer) in exchange for the consideration. 68 The fair value of the non-cash consideration may vary because of the form of the consideration (for example, a change in....
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....ideration payable to the customer as a reduction of the transaction price. 72 Accordingly, if consideration payable to a customer is accounted for as a reduction of the transaction price, an entity shall recognise the reduction of revenue when (or as) the later of either of the following events occurs: (a) the entity recognises revenue for the transfer of the related goods or services to the customer; and (b) the entity pays or promises to pay the consideration (even if the payment is conditional on a future event). That promise might be implied by the entity's customary business practices. Allocating the transaction price to performance obligations 73 The objective when allocating the transaction price is for an entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer. 74 To meet the allocation objective, an entity shall allocate the transaction price to each performance obligation identified in the contract on a ....
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....ate the price that a customer in that market would be willing to pay for those goods or services. That approach might also include referring to prices from the entity's competitors for similar goods or services and adjusting those prices as necessary to reflect the entity's costs and margins. (b) Expected cost plus a margin approach-an entity could forecast its expected costs of satisfying a performance obligation and then add an appropriate margin for that good or service. (c) Residual approach-an entity may estimate the stand-alone selling price by reference to the total transaction price less the sum of the observable stand-alone selling prices of other goods or services promised in the contract. However, an entity may use a residual approach to estimate, in accordance with paragraph 78, the stand-alone selling price of a good or service only if one of the following criteria is met: (i) the entity sells the same good or service to different customers (at or near the same time) for a broad range of amounts (ie the selling price is highly variable because a representative stand-alone selling price is not discernible from past transactions or other observ....
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....nd-alone basis; (b) the entity also regularly sells on a stand-alone basis a bundle (or bundles) of some of those distinct goods or services at a discount to the stand-alone selling prices of the goods or services in each bundle; and (c) the discount attributable to each bundle of goods or services described in paragraph 82(b) is substantially the same as the discount in the contract and an analysis of the goods or services in each bundle provides observable evidence of the performance obligation (or performance obligations) to which the entire discount in the contract belongs. 83 If a discount is allocated entirely to one or more performance obligations in the contract in accordance with paragraph 82, an entity shall allocate the discount before using the residual approach to estimate the stand-alone selling price of a good or service in accordance with paragraph 79(c). Allocation of variable consideration 84 Variable consideration that is promised in a contract may be attributable to the entire contract or to a specific part of the contract, such as either of the following: (a) one or more, but not all, performance obligations....
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....es. 89 An entity shall allocate a change in the transaction price entirely to one or more, but not all, performance obligations or distinct goods or services promised in a series that forms part of a single performance obligation in accordance with paragraph 22(b) only if the criteria in paragraph 85 on allocating variable consideration are met. 90 An entity shall account for a change in the transaction price that arises as a result of a contract modification in accordance with paragraphs 18-21. However, for a change in the transaction price that occurs after a contract modification, an entity shall apply paragraphs 87-89 to allocate the change in the transaction price in whichever of the following ways is applicable: (a) An entity shall allocate the change in the transaction price to the performance obligations identified in the contract before the modification if, and to the extent that, the change in the transaction price is attributable to an amount of variable consideration promised before the modification and the modification is accounted for in accordance with paragraph 21(a). (b) In all other cases in which the modification was not accoun....
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....ts in accordance with those other Standards. 97 Costs that relate directly to a contract (or a specific anticipated contract) include any of the following: (a) direct labour (for example, salaries and wages of employees who provide the promised services directly to the customer); (b) direct materials (for example, supplies used in providing the promised services to a customer); (c) allocations of costs that relate directly to the contract or to contract activities (for example, costs of contract management and supervision, insurance and depreciation of tools and equipment used in fulfilling the contract); (d) costs that are explicitly chargeable to the customer under the contract; and (e) other costs that are incurred only because an entity entered into the contract (for example, payments to subcontractors). 98 An entity shall recognise the following costs as expenses when incurred: (a) general and administrative costs (unless those costs are explicitly chargeable to the customer under the contract, in which case an entity shall evaluate those costs in accordance with paragraph 97); (b) costs of wasted....
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....airment test in paragraph 101, an entity shall include the resulting carrying amount of the asset recognised in accordance with paragraph 91 or 95 in the carrying amount of the cash-generating unit to which it belongs for the purpose of applying Ind AS 36, Impairment of Assets, to that cash-generating unit. 104 An entity shall recognise in profit or loss a reversal of some or all of an impairment loss previously recognised in accordance with paragraph 101 when the impairment conditions no longer exist or have improved. The increased carrying amount of the asset shall not exceed the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously. Presentation 105 When either party to a contract has performed, an entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment. An entity shall present any unconditional rights to consideration separately as a receivable. 106 If a customer pays consideration, or an entity has a right to an amount of consideration that is uncondi....
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.... the disclosure requirements is for an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. To achieve that objective, an entity shall disclose qualitative and quantitative information about all of the following: (a) its contracts with customers (see paragraphs 113-122); (b) the significant judgements, and changes in the judgements, made in applying this Standard to those contracts (see paragraphs 123-126); and (c) any assets recognised from the costs to obtain or fulfil a contract with a customer in accordance with paragraph 91 or 95 (see paragraphs 127-128). 111 An entity shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. An entity shall aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have substantially different characteristics. 112 An entity need not disclose ....
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....ided may use qualitative information. 118 An entity shall provide an explanation of the significant changes in the contract asset and the contract liability balances during the reporting period. The explanation shall include qualitative and quantitative information. Examples of changes in the entity's balances of contract assets and contract liabilities include any of the following: (a) changes due to business combinations; (b) cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification; (c) impairment of a contract asset; (d) a change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable); and (e) a change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability). Perfor....
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....ing the practical expedient in paragraph 121 and whether any consideration from contracts with customers is not included in the transaction price and, therefore, not included in the information disclosed in accordance with paragraph 120. For example, an estimate of the transaction price would not include any estimated amounts of variable consideration that are constrained (see paragraphs 56-58). Significant judgements in the application of this Standard 123 An entity shall disclose the judgements, and changes in the judgements, made in applying this Standard that significantly affect the determination of the amount and timing of revenue from contracts with customers. In particular, an entity shall explain the judgements, and changes in the judgements, used in determining both of the following: (a) the timing of satisfaction of performance obligations (see paragraphs 124-125); and (b) the transaction price and the amounts allocated to performance obligations (see paragraph 126). Determining the timing of satisfaction of performance obligations 124 For performance obligations that an entity satisfies over time, an entity shall dis....
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.... 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 expedients 129 If an entity elects to use the practical expedient in either paragraph 63 (about the existence of a significant financing component) or paragraph 94 (about the incremental costs of obtaining a contract), the entity shall disclose that fact. Appendix A Defined terms This appendix is an integral part of the Standard. contract An agreement between two or more parties that creates enforceable rights and obligations. contract asset An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance). contract liability An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the custome....
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....nment arrangements (paragraphs B77-B78); (l) bill-and-hold arrangements (paragraphs B79-B82); (m) customer acceptance (paragraphs B83-B86); and (n) disclosure of disaggregated revenue (paragraphs B87-B89). Performance obligations satisfied over time B2 In accordance with paragraph 35, a performance obligation is satisfied over time if one of the following criteria is met: (a) the customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs (see paragraphs B3-B4); (b) the entity's performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced (see paragraph B5); or (c) the entity's performance does not create an asset with an alternative use to the entity (see paragraphs B6-B8) and the entity has an enforceable right to payment for performance completed to date (see paragraphs B9-B13). Simultaneous receipt and consumption of the benefits of the entity's performance (paragraph 35(a)) B3 For some types of performance obligations, the assessment of whether a customer r....
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....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 ability to direct an asset for another use must be substantive for the asset not to have an alternative use to the entity. A contractual restriction is substantive if a customer could enforce its rights to the promised asset if the entity sought to direct the asset for another use. In contrast, a contractual restriction is not substantive if, for example, an asset is largely interchangeable with other assets that the entity could transfer to another customer without breaching the contract and without incurring significant costs that otherwise would not have been incurred in relation to that contract. B8 A practical limitation on an entity's ability to direct an asset for another use exists if an entity would incur significant economic losses to direct the asset for another use. A significant economic loss could arise because the entity either would incur significant costs to rework the asset or would only be able to sell the asset at a si....
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.... 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 contract at that time (including when a customer fails to perform its obligations as promised), the contract (or other laws) might entitle the entity to continue to transfer to the customer the goods or services promised in the contract and require the customer to pay the consideration promised in exchange for those goods or services. In those circumstances, an entity has a right to payment for performance completed to date because the entity has a right to continue to perform its obligations in accordance with the contract and to require the customer to perform its obligations (which include paying the promised consideration). B12 In assessing the existence and enforceability of a right to payment for performance completed to date, an entity shall consider the contractual terms as well as any legislation or legal precedent that could supplement or override those contractual terms. This would include an....
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....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 services for which control has transferred to the customer. For example, output methods based on units produced or units delivered would not faithfully depict an entity's performance in satisfying a performance obligation if, at the end of the reporting period, the entity's performance has produced work in progress or finished goods controlled by the customer that are not included in the measurement of the output. B16 As a practical expedient, if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity's performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), the entity may recognise revenue in the amount to which the entity has a right to invoice. B17 The disadvantages of....
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.... (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 significantly involved in designing and manufacturing the good (but the entity is acting as a principal in accordance with paragraphs B34-B38). Sale with a right of return B20 In some contracts, an entity transfers control of a product to a customer and also grants the customer the right to return the product for various reasons (such as dissatisfaction with the product) and receive any combination of the following: (a) a full or partial refund of any consideration paid; (b) a credit that can be applied against amounts owed, or that will be owed, to the entity; and (c) another product in exchange. B20AA In some contracts, an entity transfers control of a product to a customer with an unconditional right of return. In such cases, the recognit....
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....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 same type, quality, condition and price (for example, one colour or size for another) are not considered returns for the purposes of applying this Standard. B27 Contracts in which a customer may return a defective product in exchange for a functioning product shall be evaluated in accordance with the guidance on warranties in paragraphs B28-B33. Warranties B28 It is common for an entity to provide (in accordance with the contract, the law or the entity's customary business practices) a warranty in connection with the sale of a product (whether a good or service). The nature of a warranty can vary significantly across industries and contracts. Some warranties provide a customer w....
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....ive 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 together as a single performance obligation. B33 A law that requires an entity to pay compensation if its products cause harm or damage does not give rise to a performance obligation. For example, a manufacturer might sell products in a jurisdiction in which the law holds the manufacturer liable for any damages (for example, to personal property) that might be caused by a consumer using a product for its intended purpose. Similarly, an entity's promise to indemnify the customer for liabilities and damages arising from claims of patent, copyright, trademark or other infringement by the entity's products does not give rise to a performance obliga....
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....tomer 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 service (which includes goods or services from other parties) and directs their use to create the combined output that is the specified good or service. B35B When (or as) an entity that is a principal satisfies a performance obligation, the entity recognises revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred. B36 An entity is an agent if the entity's performance obligation is to arrange for the provision of the specified good or service by another party. An entity that is an agent does n....
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....der 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 good or service to the customer (ie the entity is no longer acting as the principal), the entity shall not recognise revenue for that performance obligation. Instead, the entity shall evaluate whether to recognise revenue for satisfying a performance obligation to obtain a contract for the other party (ie whether the entity is acting as an agent). Customer options for additional goods or services B39 Customer options to acquire additional goods or services for free or at a discount come in many forms, including sales incen....
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....ods 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 customer a right to receive a good or service in the future (and obliges the entity to stand ready to transfer a good or service). However, customers may not exercise all of their contractual rights. Those unexercised rights are often referred to as breakage. B46 If an entity expects to be entitled to a breakage amount in a contract liability, the entity shall recognise the expected breakage amount as revenue in proportion to the pattern of rights exercised by the customer.....
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....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) patents, trademarks and copyrights. B53 In addition to a promise to grant a licence (or licences) to a customer, an entity may also promise to transfer other goods or services to the customer. Those promises may be explicitly stated in the contract or implied by an entity's customary business practices, published policies or specific statements (see paragraph 24). As with other types of contracts, wh....
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....ectual 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 rights may also indicate that the customer could reasonably expect that the entity will undertake such activities. B59A An entity's activities significantly affect the intellectual property to which the customer has rights when either: (a) those activities are expected to significantly change the form (for e....
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....n 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 define whether the entity satisfies its performance obligation at a point in time or over time. (b) Guarantees provided by the entity that it has a valid patent to intellectual property and that it will defend that patent from unauthorised use-a promise to defend a pat....
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.... 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 the time value of money. B68 If the repurchase agreement is a financing arrangement, the entity shall continue to recognise the asset and also recognise a financial liabil....
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....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, but are not limited to, the following: (a) the product is controlled by the entity until a specifi....
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.... 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 service. For example,....
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....ed for other 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 s....
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....t have variable consideration, an entity may use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in 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 ....
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.... Background 1 Infrastructure for public services-such as roads, bridges, tunnels, prisons, hospitals, airports, water distribution facilities, energy supply and telecommunication networks-has traditionally been constructed, operated and maintained by the public sector and financed through public 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 arr....
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.... are within the scope of this Appendix. 7 This Appendix applies to both: (a) infrastructure that the operator constructs or acquires from a third party for the purpose of the service arrangement; and (b) existing infrastructure to which the grantor gives the operator access for the purpose of the service arrangement. 8 This Appendix does not specify the accounting 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; ....
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....able by law. The operator has an unconditional right to receive cash if the grantor contractually guarantees to pay the operator (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received from users of the public service and specified or determinable amounts, even if payment is contingent on the operator ensuring that the infrastructure meets specified quality or efficiency requirements. 17 The operator shall recognise an intangible asset to the extent that it receives a right (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 refer....
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.... 26 Ind AS 38 applies to the intangible asset recognised in accordance with paragraphs 17 and 18 of this Appendix. Paragraphs 45-47 of Ind AS 38 provide guidance on measuring intangible assets acquired in exchange for a non-monetary asset or assets or a combination of monetary and non-monetary assets. Items provided to the operator by the grantor 27 In accordance with paragraph 11 of this Appendix, infrastructure items to which the operator is given access by the grantor for the purposes of the service arrangement are not recognised as property, plant and equipment of the operator. The grantor 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 ....
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....tor's behalf-even though, in many cases, it may have wide managerial discretion. AG6 Conditions (a) and (b) together identify when the infrastructure, including any replacements required (see paragraph 21 of Appendix D), is controlled by the grantor for the whole of its economic life. For example, if the operator has to replace part of an item of infrastructure during the period of the arrangement (eg the top layer of a road or the roof of a building), the item of infrastructure shall be considered as a whole. Thus condition (b) is met for the whole of the infrastructure, including the part that is replaced, if the grantor controls any significant residual interest 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 mi....
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...., tunnels, bridges, airports and telecommunication networks. Examples of arrangements that are not service concession arrangements include an entity outsourcing the operation of its internal services (eg employee cafeteria, building maintenance, and accounting or information technology functions). 2 A service concession arrangement generally involves the grantor conveying for the period of the concession to the operator: (a) the right to provide services that give the public access to major economic and social facilities, and (b) in some cases, the right to use specified tangible assets, intangible assets, or financial assets, in exchange for the operator: (c) committing to provide the services according to certain terms and 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 is....
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....s of a similar nature (eg toll collections, telecommunications and water treatment services). Appendix F References to matters contained in other Indian Accounting Standards This appendix is an integral part of the Ind AS. This appendix lists the appendices which are part of other Indian Accounting Standards and make reference to Ind AS 115, Revenue from Contracts with Customers. 1 Appendix B, Evaluating the Substance of Transactions involving the Legal Form of a Lease contained in Ind AS 17, Leases. 2 Appendix A, Intangible Assets-Web Site Costs contained in Ind AS 38, Intangible Assets. Appendix 1 Note: This appendix is not a part of the Indian Accounting Standard. The purpose of this appendix is only to bring out the major differences, if any, between Indian Accounting Standard (Ind AS) 115 and the corresponding International 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 Contra....
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....ntracts with Customers, requires an entity to measure revenue from contracts with customers at the amount of consideration to which the entity expects to be entitled in exchange for transferring promised goods or services. For example, the amount of revenue recognized reflects any trade discounts and volume rebates the entity allows. An entity undertakes, in the course of its ordinary activities, other transactions that do not generate revenue but are incidental to the main revenue-generating activities. An entity presents the results of such transactions, when this presentation reflects the substance of the transaction or other event, by netting any income with related expenses arising on the same transaction. For example: (a) an entity presents gains and losses on the disposal of non-current assets, including investments and operating assets, by deducting from the amount of consideration on disposal the carrying amount of the asset and related selling 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 a....
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....s, however, it may be appropriate to group similar or related items. This may be the case with items of inventory relating to the same product line that have similar purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably evaluated separately from other items in that product line. It is not appropriate to write inventories down on the basis of a classification of inventory, for example, finished goods, or all the inventories in a particular operating segment.'' ; (vi) for paragraph 37, the following paragraph shall be substituted, namely:- ''37. Information about the carrying amounts held in different classifications of inventories and the extent of the changes in these assets is useful to financial statement users. Common classifications of inventories are merchandise, production supplies, materials, work in progress and finished goods.'' ; (vii) after paragraph 39, following shall be inserted, namely,- "Effective Date 40 * 40A * 40B * 40C * 40D * 40E As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraphs ....
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.... The difference between the carrying amount of the debt instrument in Entity A's balance sheet of Rs. 918 and its tax base of Rs. 1,000 gives rise to a deductible temporary difference of Rs. 82 at the end of Year 2 (see paragraphs 20 and 26(d)), irrespective of whether Entity A expects to recover the carrying amount of the debt instrument by sale or by use, i.e. by holding it and collecting contractual cash flows, or a combination of both. This is because deductible temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base that will result in amounts that are deductible in determining taxable profit (tax loss) of future periods, when the carrying amount of the asset or liability is recovered or settled (see paragraph 5). Entity A obtains a deduction equivalent to the tax base of the asset of Rs. 1,000 in determining taxable profit (tax loss) either on sale or on maturity. " ; (ii) after paragraph 27, the following paragraph shall be inserted, namely:- "27A When an entity assesses whether taxable profits will be available against which it can utilise a deductib....
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....ty will achieve this. For example, when an asset is measured at fair value, the entity shall consider whether there is sufficient evidence to conclude that it is probable that the entity will recover the asset for more than its carrying amount. This may be the case, for example, when an entity expects to hold a fixed-rate debt instrument and collect the contractual cash flows." ; (v) in paragraph 59, for item (a), the following item shall be substituted, namely:- ''(a) interest, royalty or dividend revenue is received in arrears and is included in accounting profit in accordance with Ind AS 115, Revenue from Contracts with Customers, or Ind AS 109, Financial Instruments, as relevant, but is included in taxable profit (tax loss) on a cash basis; and'' ; (vi) after paragraph 88, the following shall be inserted, namely:- "Effective Date 89 * 90 * 91 * 92 * 93 * 94 * 95 * 96 * 97 * 98 * 98A * 98B * 98C * 98D * 98E As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraph 59 is amende....
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....ordance with the requirements for determining when a performance obligation is satisfied in Ind AS 115. Ind AS 17 applies to disposal by a sale and leaseback.'' ; (iii) for paragraph 72, the following paragraph shall be substituted, namely:- ''72 The amount of consideration to be included in the gain or loss arising from the derecognition of an item of property, plant and equipment is determined in accordance with the requirements for determining the transaction price in paragraphs 47-72 of Ind AS 115. Subsequent changes to the estimated amount of the consideration included in the gain or loss shall be accounted for in accordance with the requirements for changes in the transaction price in Ind AS 115.'' ; (iv) after paragraph 79, the following shall be inserted, namely,- "Transitional Provisions 80 * 80A * 80B * 80C * Effective Date 81 * 81A * 81B * 81C * 81D * 81E * 81F * 81G * 81H * 81I * 81J As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraphs 68A, 69, 72 are a....
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....) in Appendix D, (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.'' ; XV. Indian Accounting Standard (Ind AS) 18 shall be omitted; XVI. in "Indian Accounting Standard (Ind AS) 21", - (i) after Appendix A, the following Appendix shall be inserted, namely:- ''Appendix B, Foreign Currency Transactions and Advance Consideration This appendix is an integral part of the Ind AS Background 1 Paragraph 21 of Ind AS 21, The Effects of Changes in Foreign Exchange Rates, requires an entity to record a foreign currency transaction, on initial recognition in its functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency (the exchange rate) at the date of the transaction. Paragraph 22 of ....
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....sses how to determine 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 (or part of it) on the derecognition of a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration in a foreign currency. Accounting Principles 8 Applying paragraphs 21-22 of Ind AS 21, 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 (or part of it) is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. 9 If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration. Effective date and transition of Appendix B This is an integral part of Appendix B and has the same authority as the other parts of the Appendix B. Effective date A1 An entity shall apply this Appendix for annual reporting periods beginning on....
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.... ''36A Notwithstanding the requirement in paragraph 36, if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate's or joint venture's interests in subsidiaries. This election is made separately for each investment entity associate or joint venture, at the later of the date on which (a) the investment entity associate or joint venture is initially recognised; (b) the associate or joint venture becomes an investment entity; and (c) the investment entity associate or joint venture first becomes a parent.'' ; (iii) after paragraph 44, following shall be inserted, namely;- ''Effective date and transition 45 * 45A * 45B * 45C * 45D * 45E Annual Improvements to Ind AS - Amendments in Ind AS 112 and 28, amended paragraphs 18 and 36A. An entity shall apply those amendments retrospectively in accordance with Ind AS 8 for annual periods beginning on or after ....
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....context. However, in order to maintain consistency with paragraph numbers of IAS 32, these paragraph numbers are retained in Ind AS 32." ; XX. in "Indian Accounting Standard (Ind AS) 34",- (i)in paragraph 15B, for item (b), the following item shall be substituted, namely:- ''(b) recognition of a loss from the impairment of financial assets, property, plant and equipment, intangible assets, assets arising from contracts with customers, or other assets, and the reversal of such an impairment loss;'' ; (ii)in paragraph 16A, after item (k), the following item shall be inserted, namely:- "(l) the disaggregation of revenue from contracts with customers required by paragraphs 114-115 of Ind AS 115, Revenue from Contracts with Customers." ; (iii) after paragraph 45, the following shall be inserted, namely,- "Effective date and transition 46 * 47 * 48 * 49 * 50 * 51 * 52 * 53 * 54 * 55 As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraph 15B and 16A are amended. An entity shall apply those amendments when i....
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....ee Ind AS 104, Insurance Contracts). However, this Standard applies to provisions, contingent liabilities and contingent assets of an insurer, other than those arising from its contractual obligations and rights under insurance contracts within the scope of Ind AS 104; (f) contingent consideration of an acquirer in a business combination (see Ind AS 103, Business Combinations); and (g) revenue from contracts with customers (see Ind AS 115, Revenue from Contracts with Customers). However, as Ind AS 115 contains no specific requirement to address contracts with customers that are, or have become, onerous, this Standard applies to such cases.'' ; (ii) for paragraph 6 shall be omitted; (iii) after paragraph 92, the following shall be inserted, namely,- "Transitional Provisions 93 * 94 * Effective date 95 * 96 * 97 * 98 * 99 * 100 As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraph 5 is amended and paragraph 6 is deleted. An entity shall apply those amendments when it applies Ind AS 115." ; (iv) in Appendix D, for....
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....al by a sale and leaseback.'' ; (iv) for paragraph 116, the following shall be substituted, namely:- ''116 The amount of consideration to be included in the gain or loss arising from the derecognition of an intangible asset is determined in accordance with the requirements for determining the transaction price in paragraphs 47-72 of Ind AS 115. Subsequent changes to the estimated amount of the consideration included in the gain or loss shall be accounted for in accordance with the requirements for changes in the transaction price in Ind AS 115.'' ; (v) after paragraph 128, the following shall be inserted, namely:- "Transitional provisions and effective date 129 * 130 * 130A * 130B * 130C * 130D * 130E * 130F * 130G * 130H * 130I * 130J * 130K As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraphs 3,114,116 and in Appendix A paragraph 6 are amended. An entity shall apply those amendments when it applies Ind AS 115." (vi) in Appendix A, for paragraph 6, the following paragraph shall be ....
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....nge 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 change in management's intentions for the use of a property does not provide evidence of a change in use. Examples of evidence of a change in use include: (a) commencement of owner-occupation, or of development with a view to owner-occupation, for a transfer from investment property to owner-occupied property; (b) commencement of development with a view to sale, for a transfer from investment property to inventories; (c) end of owner-occupation, for a transfer from owner-occupied property to investment property; and (d) inception of an operating lease to another party, for a transfer from inventories to investment property. (e) Omitted*; (iv) for paragraph 58, the following paragraph shall be substituted, namely:- ''58 When an entity decides to dispose of an investment property without development, it continues to treat the property as an investment property until it is derecognised (eliminated from the balance sheet) and does not reclassify it as inventory. Simi....
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....C, 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 with paragraph 84C. The entity shall disclose those amounts reclassified as part of the reconciliation of the carrying amount of investment property at the beginning and end of the period as required by paragraph 79. Effective date 85 * 85A * 85B * 85C * 85D * 85E As a consequence of issuance of Ind AS 115, Revenue from Contracts with Customers, paragraphs 3(b), 9, 67and 70 are amended. An entity shall apply those amendments when it applies Ind AS 115. 85F * 85G Transfers of Investment Property (Amendments to Ind AS 40), amended paragraphs 57-58 and added paragraphs 84C-84E. An entity shall apply those amendments for annual periods beginning on or after 1st April, 2018." ; (viii) in Appendix 1, (a) in paragraph 1, after item (xi), the following item shall be inserted, namely:- '....
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....d an obligation to pay the cash flows from the asset that meets the conditions in paragraph 3.2.5? [Paragraph 3.2.4(b)] Yes Has the entity transferred substantially all risks and rewards? [Paragraph 3.2.6(a)] No Yes Derecognise the asset Continue to recognise No the asset Yes De recognise the asset Has the entity retained substantially all risks and rewards? [Paragraph 3.2.6(b)] Continue to recognise Yes the asset No Has the entity retained control of the asset? [Paragraph 3.2.6(c)] T Yes Continue to recognise the asset to the extent of the entity's continuing involvement"; Derecognise the No asset Document 2 Does the grantor control or regulate what services the operator must provide with the infrastructure, to whom it must provide them, and at what price? Yes Does the grantor control, through ownership, beneficial entitlement or otherwise, any significant residual interest in the infrastructure at the end of the service arrangements? Or is the infrastructure used in the arrangements for the entire useful life? Yes Is the infrastructure constructed or acquired ....