The International Accounting Standards Board (IASB) has proposed some clarifications to the new revenue recognition standard, IFRS 15, a senior official of the global standard setter said.
This new standard — to be mandatory from January 1, 2018 — outlines a single comprehensive model of accounting for revenue arising from contracts with customers.
Earlier application of IFRS15 is permitted and India is expected to soon take a call on this issue.
India had earlier indicated that it would adopt new revenue recognition concepts from April 1 next year. It may, however, now rethink its earlier decision with the international community deciding to defer implementation by one year.
The new revenue standard IFRS 15 — final product of more than a decade of efforts by both IASB and Financial Accounting Standards Board — will have major implications on how and when revenues are to be recognised by companies.
IASB on Thursday issued an exposure draft for the proposed clarificatory amendments to IFRS 15, Henry Rees, Technical Director, IASB told BusinessLine here.
Stakeholders have 90 days to send in their comments, he said, adding that the amendments are expected to be finalised by the end of the year.
Rees was in New Delhi to attend a workshop organised by the CA institute on the new revenue recognition standard.
The proposed clarifications (targeted amendments) related to three topics–identifying performance obligations; principal versus agent considerations and licensing.
The IASB has also decided that it was not necessary to amend IFRS 15 with respect to collectability or measuring non cash consideration.
The latest exposure draft seeks to clarify how to identify the performance obligations in a contract; how to determine whether a party involved in a transaction is the principal or the agent; and how to determine whether a licence provides the customer with the right to access or a right to use the entity’s intellectual property.
Meanwhile, CA institute President Manoj Fadnis said that the central council was yet to firm up its views on whether effective date for Ind AS115 – equivalent for IFRS15 — should be deferred or not.
The National Advisory Committee on Accounting Standards (NACAS) will meet on August 5 to take a call on the issue, said its Chairman Amarjit Chopra.
Parveen Kumar, Partner, ASA & Associates LLP, said that complexities of recognising revenues as per Ind AS115 (IFRS 15) must not be taken lightly.
“I would prefer India migrating first to Ind AS 18 and then in couple of years to Ind AS 115”, Kumar said.
(Business Line)
Related Tags accounting, IFRS
