AS 9

REVENUE RECOGNITION
PRESENTED BY: PRIYA
KAUSHAL

CONTENTS

Objective
Timing of revenue recognition
Applicability
Revenue recognition from sale of
goods
Revenue recognition from rendering
of services
Revenue recognition with respect to
royalties, interest and dividends

Objective of AS-9
Ascertain the recognition of revenue and the
circumstances in which it can be postponed.
Revenue means gross inflow of cash,
receivables and other considerations arising
in the course of ordinary business activities
pertaining to :
Sale of goods
Rendering of services
Use of enterprise resources by others yielding
interest, dividends and royalties

TIMING
At the time of sale or rendering of
services
Incase of uncertainty at the time of
revenue collection, it can be
postponed.

APPLICABILITY
Not applicable to revenues arising
out of
Construction contracts (AS-7)
Hire-purchase and leasing agreement
Govt. grants and subsidies
Insurance contracts
Extra-ordinary gains realized or
unrealized

REVENUE FROM SALE OF

GOODS
Recognized when all the three conditions are
fufilled viz.,
1. Seller has transferred the ownership of goods
to buyer for a price
Or
2. All significant risks and rewards of the
ownership have been transferred to the buyer
Seller doesnot retain any effective control of the
ownership of the transferred goods
There is no significant uncertainty in collection
of the amount of consideration

REVENUE FROM SALE OF

GOODS
EXCEPTIONS

Delivery of the goods is delayed by the buyer

recognize immediately provided the goods are in
the hands of the seller, identified and ready for
delivery at the time of recognition.
Delivery of the goods sold subject to
Installation and inspection
Sale on approval
Guarantee sales
Warranty sales
Consignment sales

REVENUE FROM SALE OF

GOODS
Delivery of the goods sold subject to
Special orders and shipments
Instalment sales
Revenue swaps (IFRS -18)

REVENUE FROM RENDERING OF

SERVICES
Performance of the service is
measured by two methods
COMPLETED
PROPORTIONATE
SERVICE
COMPLETION
CONTRACT
METHOD
METHOD

REVENUE FROM RENDERING OF

SERVICES
SOME SPECIAL CASES
Advertising commission : recognized
when advertisement appears before
public
Insurance commission : effective
commencement / renewal date of the
policy

REVENUE FROM USE OF

ENTERPRISE RESOURCES
INTEREST

COMPARISON
AS-9

Some examples
A claim lodged with the railways in March
2013 for loss of goods of Rs 2,00,000 has
been passed for payment in March 2016
to the extent of Rs 1,50,000.
ABC ltd. has recognised Rs 7.5 lakhs on
accrual
income
from
dividend
on
securities and mutual funds on 31 st march,
2015. the dividends were proposed on 10 th
March, 2015 and declared at 15% on 30 th
June, 2015.