After more than 10 years of work, in May 2014, the International Accounting Standards Board (IASB) and Federal Accounting Standards Board (FASB) published their largely converged standards on revenue recognition. The IASB issued IFRS 15 Revenue from Contracts with Customers and FASB issued ASU 2014-09 with the same title. The new standards create a single model for revenue recognition for contracts with customers and will promote greater consistency and comparability across industries and capital markets.
In convergence with IFRS, the Ministry of Corporate Affairs (MCA) issued Ind AS 115, Revenue from Contracts with Customers on 28 March 2018. The notification from MCA is a welcome step towards aligning the new standard under Ind AS to the global adoption of new revenue recognition standards under IFRS.
The actual impact on each company will depend on their specific customer contracts and how they have applied existing Standards. For some it will be a significant shift, and system changes will be required, while others may see only minor changes. The companies also have to carefully evaluate the transition provisions of the standard and come up with the right approach to manage investor communications about how revenue forecasts shall change going forward.
This publication Accounting for revenue – the new normal: Ind AS 115 provides an overview of how the new revenue recognition standard may impact your business.