India is likely to defer the adoption of new accounting standard on revenue recognition, known as Ind AS 115, as the country's accounting standards panel feels that more consultation with the industry is needed to clarify its stringent requirements.
The National Advisory Committee on Accounting Standard (NACAS) has favoured deferring implementation of Ind AS 115 in its recommendations submitted to the ministry of corporate affairs (MCA), a panel member said. “Let them take a final call on it,“ the person said. The new standard would have required stringent disclosures. Under this standard, revenue from services would have to be unbundled and shown separately in the books.
As per the government roadmap, all . 500 crore companies, with net worth of ` or more (whether listed or unlisted), should move to Ind AS (which has been converged with International financial Reporting Standards) from financial year beginning on or after April 1, 2016.
International Accounting Standards Body (IASB) has already deferred revenue recognition standard till 2018.Some European telecom companies have sought clarity. Experts said a delay in implementation will help India to align its standard with the US GAAP.
“This will provide companies with time to evaluate the new requirements and complexities, particularly in the areas of identification of multiple performance obligations in a bundled arrangement,“ said Sumit Seth, partner at PwC India.
Implementation of the new standard would largely impact information technology, telecom, automobiles and real estate companies.
Ind AS 115 would replace the fragmented set of rules by which companies book their revenues differently. Under the new standard, companies will have to recognise revenues in a way that shows the transfer of good and services to customers that reflects the payment to be received by company for each service separately.
“After this standard comes into existence companies would have to unbundle the revenue for every service which has to be reported separately. This method is more scientific and transparent,“ Manoj Fadnis, president, Institute of Chartered Accountants of India (ICAI), had told ET earlier.
In case Ind AS 115 is deferred, India will continue using the current standard IAS 18 for revenue recognition.
The Economic Times, New Delhi, 04 September 2015
The National Advisory Committee on Accounting Standard (NACAS) has favoured deferring implementation of Ind AS 115 in its recommendations submitted to the ministry of corporate affairs (MCA), a panel member said. “Let them take a final call on it,“ the person said. The new standard would have required stringent disclosures. Under this standard, revenue from services would have to be unbundled and shown separately in the books.
As per the government roadmap, all . 500 crore companies, with net worth of ` or more (whether listed or unlisted), should move to Ind AS (which has been converged with International financial Reporting Standards) from financial year beginning on or after April 1, 2016.
International Accounting Standards Body (IASB) has already deferred revenue recognition standard till 2018.Some European telecom companies have sought clarity. Experts said a delay in implementation will help India to align its standard with the US GAAP.
“This will provide companies with time to evaluate the new requirements and complexities, particularly in the areas of identification of multiple performance obligations in a bundled arrangement,“ said Sumit Seth, partner at PwC India.
Implementation of the new standard would largely impact information technology, telecom, automobiles and real estate companies.
Ind AS 115 would replace the fragmented set of rules by which companies book their revenues differently. Under the new standard, companies will have to recognise revenues in a way that shows the transfer of good and services to customers that reflects the payment to be received by company for each service separately.
“After this standard comes into existence companies would have to unbundle the revenue for every service which has to be reported separately. This method is more scientific and transparent,“ Manoj Fadnis, president, Institute of Chartered Accountants of India (ICAI), had told ET earlier.
In case Ind AS 115 is deferred, India will continue using the current standard IAS 18 for revenue recognition.
The Economic Times, New Delhi, 04 September 2015
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