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REVENUE RECOGNITION (AS-9)
Objective 9.1
9.1-1 What is Revenue?Timing of Revenue Recognition 9.2
9.4-1 Revenue Recognition when the delivery of goods is delayed at buyers request -
9.4-2 Revenue Recognition when delivery of goods sold subject to conditions— Installation and inspection: Sale on approval
Warranty Sales
Consignment sales
Special order and shipments
Subscriptions for publication
Instalment sales
Revenue from rendering of the services
9.5 -
9.5-1 Completed service contract method -
9.5-2 Proportionate Completion Method -
9.5-3 Revenue Recognition NormsInstallation fees -
9.9-1 Subsequent uncertainty in collection -Disclosure
9.10 -
Treatment of inter-divisional transfers
9.11
ILLUSTRATIONS
Q1. The board of directors decided on 31-3-2010 to increase the sale price of certain items retrospectively from 1st January, 2010.
In view of this price revision with effect from 1st January, 2010, the company has to receive ` 25 lakhs from its customers in respect of sales made from 1st January, 2010 to 31st March, 2010 and the Accountant cannot make up his mind whether to include ` 25 lakhs in the sales for 2009-10. Suggest.
Solution:
vide
Q2. Advise to Induga Ltd. about the treatment of the following in the final statement of accounts for the year ended on 31st March, 2010.
A claim lodged with the Railways in March 2007 for loss of goods of ` 2,00,000 had been passed for payment in March 2010 for ` 1,50,000. No entry was passed in the books of the company, when the claim was lodged.
Solution:
Q3. The NDA Ltd. has recognized ` 7.5 lakhs on accrual basis income from dividend on securities and units of mutual funds of face value of ` 50 lakhs held by it as at the end of the financial year 31st March, 2010. The dividends on the securities and mutual funds were declared at the rate of 15% on 15th June, 2010. The dividend was proposed on 10-4-2010 by the declaring company. Whether the treatment is as per the relevant accounting standard?
Solution:
Q4. Induga Ltd., used certain resources of NDA Ltd. In return NDA Ltd. received `10 lakhs and ` 15 lakhs as interest and royalties respectively from Induga Ltd. during the year 2010-11. You are required to state whether and on what basis these revenues can be recognized by NDA Ltd.
Solution: -
i Interest: -
ii Royalties:`
Q5. Sales include ` 200 lakhs representing royalty receivable for supply of knowhow to a company in South-East Asia. As per agreement the amount is to be received in US Dollars. However, exchange permission was denied to the company in Southeast Asia for remitting the same.
Solution:
Q6. Media advertising obtained advertisement right for one day world cup cricket tournament to be held in May/June 2010 for ` 250 lakhs.
By 31st March, 2010, they paid ` 150 lakhs to secure these advertisement rights. The balance ` 100 lakhs was paid in April 2010.
By 31st March, 2010, they processed advertisement for 70% of the available time for ` 350 lakhs. The advertiser paid 60% of amount by that date. The balance 40% was received in April 2010.
The advertisement for balance 30% time was procured in April 2010 for ` 150 lakhs. The advertiser paid the full amount while booking the advertisement. 25% of the advertisement time is expected to be available in May 2010 and balance 75% in June 2010.
Calculate the profit/loss for the month of April, May, June 2010.
Solution:
Q7. M Ltd. manufacturing machinery used in Steel Plants. It quotes prices in various tenders issued by Steel Plants. As per terms of contract, full price of machinery is not released by the steel plants, but 10% thereof is retained and paid after one year if there is satisfactory performance of the machinery supplied. The company accounts for only 90% of the invoice value as sales income and the balance amount in the year of receipt to the extent of actual receipts only. State your views as an auditor.
Solution: Revenue Recognition-
Q8. NDA Limited entered into an agreement with Induga Limited for sale of goods costing ` 4 lakhs at a profit of 20% on cost. The sale transaction took place on 15th February, 2010. On the same day NDA Limited entered into another agreement with Induga Limited for repurchasing the same goods at ` 5.40 lakhs on 15th August, 2010. State the treatment of above transaction in the financial statements of NDA Limited for the year 2009-10. The pre-determined repurchase price covers, inter alia, the holding cost of Induga Limited. Give the journal entries in both the parties’ books.
Solution: -
Journal entries in the books of NDA Limited
(Being amount received from Induga Ltd. as per sale and repurchasing agreement)
(Financing charges of ` 4.80 lakhs for 1.5 months i.e ` 60,000 × 1.5/6)
(Being amount transferred to profit and loss account)
Disclosure in the Balance Sheet
Assets (under the head ‘Current Assets’):
Add:
2. Notes to accounts
Journal entries in the Books of Induga Limited
(Being amount paid to NDA Ltd. as per sale and repurchase agreement)
(Financing charges on ` 240000 for 1.5 months i.e 16000 × 1.5/6)
(Being financing charges received transferred to profit and loss account)
Disclosure in the Balance Sheet
Assets (under the head ‘Current Assets’):
This advance is fully secured by goods of NDA Ltd. market value of ` 4.80 lakhs lying with the company as security)
2. Notes to Account - `
Q9. Victory Ltd. purchase goods on credit from Lucky Ltd. for ` 250 crore for export. The export order was cancelled. Victory Ltd. decided to sell the same goods in the local market with a price discount. Lucky Ltd. was requested to offer a price discount of 15%. The Chief accountant of Lucky Ltd. wants to adjust the sales figure to the extent of the discount requested by Victory Ltd. Discuss whether this treatment is justified. [CA Final May 2006]
Solution:
Q10. XY Hotels Ltd. presents its revenue from operations in the Statement of Profit and Loss for the year ended 31st March, 2017 as under: Particulars
For the year No. ended 31st March 2017
III.
Whether the above disclosure of the revenue would be in compliance with the disclosure required in as per AS-9?
Solution: `-
Q11. Given below are the following informations of B.S. Ltd. :
(i) Goods of ` 50,000 were sold on 18-03-2018 but at the request of the buyer these were delivered on 15-04-2018.
(ii) On 13-01-2018 goods of ` 125,000 are sent on consignment basis of which 20% of the goods unsold are lying with the consignee as on 31-03-2018.
(iii) ` 100,000 worth of goods were sold on approval basis on 01-12-2017. The period of approval was 3 months after which they were considered sold. Buyer sent approval for 75% goods up to 31-01-2018 and no approval or disapproval received for the remaining goods till 31-03-2018.
You are required to advise the accountant of B.S. Ltd., with valid reasons, the amount to be recognized as revenue for the year ended 31st March, 2018 in above cases in the context of AS-9.
[CA Inter Group II, May 2019, May 2023]
Solution:
(ii):
Q12 Indicate in each case whether revenue can be recognized and when it will be recognized as per AS-9.
(1) Trade discount and volume rebate received.
(2) Where goods are sold to distributors or others for resale.
(3) Where seller concurrently agrees to repurchase the same goods at a later date.
(4) Insurance agency commission for rendering services.
(5) On 11-03-2019 cloths worth ` 50,000 were sold to X mart, but due to refurbishing of their showroom being underway, on their request, clothes were delivered on 12-04-2019.
[CA Inter Group II, Nov. 2019]
Students’ Guide to Accounting Standards (Adv. Accounts) | Study Material
AUTHOR : D.S. Rawat, Nozer Shroff
PUBLISHER : Taxmann
DATE OF PUBLICATION : January 2026
EDITION : 15th Edition
ISBN NO : 9789364557030
No. of Pages : 624
BINDING TYPE : Paperback
Rs. 795
DESCRIPTION
Students’ Guide to Accounting Standards (including Introduction of Ind AS) is a concise yet comprehensive, exam-oriented self-learning manual for CA Intermediate – Group I | Paper 1 (Accounting). The book simplifies the technical language of Accounting Standards into a structured, exam-ready format, enabling students to understand both the conceptual intent and the practical application of each standard in examinations. This Edition is fully aligned with the CA Intermediate Accounting Standards syllabus, applicable for the May & September 2026 and January 2027 examinations, and provides complete coverage of AS-1 to AS-29, along with a dedicated foundational introduction to Ind AS, within a single, integrated framework.
The Present Publication is the 15th Edition, authored by Dr D.S. Rawat & CA. Nozer Shroff, with the following noteworthy features:
• [Complete ICAI Syllabus Coverage] Covers all Accounting Standards prescribed for CA Intermediate (AS-1 to AS-29) in one consolidated volume
• [Self-learning Design] Chapters are structured for independent study, moving seamlessly from concepts to application
• [Conceptual & Numerical Integration] Combines clear theoretical explanation with exam-relevant numerical illustrations
• [Exam-focused Approach] Emphasis on recognition, measurement, disclosure, adjustments, and presentation areas tested in exams
• [Introduction to Ind AS] Provides a clear overview of the Ind AS framework and convergence philosophy with IFRS
• [Authoritative Content] Developed by experienced ICAI faculty with deep involvement in Accounting Standards and student training
• [Updated & Relevant] Incorporates all applicable Accounting Standards and interpretational guidance for the current exam cycle