AS-9 Revise in 3 Mins

Summary of the Accounting Standard 9, for Quick Revision before exam.

AS 9 Not Applicable to Revenues relating to-

Construction Contracts
Hire Purchase
Lease Agreements
Government Grants, Subsidies
Insurance Contracts
Revenues from Sale of Goods

Revenue from Sale of a Good completes only when the following three conditions are satisfied:

Property transferred to buyer
for Consideration
Significant Risk is also transferred to the buyer
Revenue from Services

There are two methods for calculating revenue from rendering of services:

Proportionate Completion Method
When a service completes after rendering more than one acts, revenue is calculated based on Proportionate Completion Method.

For Example: The famous English Premier League (Football Tournament) will run for over 8 months. These matches will be telecasted on Star Sports. Me, The CEO of Adidas wants to run advertisements about my product during this Tournament on Star Sports and pays them 80 Crore Rupees. Now, This entire 80 Crore is the revenue of Star Sports. However, based on Proportionate Completion Method, they recognise only 10 Crore as Revenue each month.

2. Completed Service Method

Here, service complete on rendering a single act and revenue is recognised only after completion of the final act.

For Example: I am a Professor and a CA Institute hires me to teach Accounts for IPCC Students for 2 months, For Rs.1 Lakh. This is a Single Act, so we will use Completed Service Method. I will recognise Rs.1 Lakh as my revenue only after completion of that 2 Months and finishing my Syllabus.

Use of Enterprise Resources:

There are basically three resources covered here:

Interest Income: This is recognised on time basis, like Monthly, Yearly etc.
Royalties: The Income will be recognised based on the Agreement.
Dividend: Revenue is recognised when the Right to receive the Dividend is established. Normally, Right to dividend is established when the Directors Declares the Dividend.


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