After Implementing Ind AS 115, What Happened to Ind AS 11 and Ind AS 18?

The implementation of Ind AS 115 has led to significant changes in the accounting standards for revenue recognition. This change aims to enhance consistency and comparability in revenue reporting across different industries, aligning with the broader international framework under IFRS 15.

Introduction of Ind AS 115

Ind AS 115 was introduced with the purpose of establishing a single, comprehensive model for entities to account for revenue arising from contracts with customers. This model ensures consistency and comparability in financial statements across various industries. Unlike previous standards like Ind AS 11 and Ind AS 18, which focused on the transfer of risks and rewards, Ind AS 115 places more emphasis on the transfer of control.

Key Changes with Ind AS 115

Ind AS 115 employs a five-step model for revenue recognition. This model is designed to be more transfer-oriented, focusing on when the customer obtains control of goods or services rather than when risks and rewards are transferred. This shift in focus helps to improve the clarity and transparency of revenue reporting in financial statements.

Withdrawal of Ind AS 11 and Ind AS 18

Following the implementation of Ind AS 115, both Ind AS 11 (Construction Contracts) and Ind AS 18 (Revenue) have been withdrawn. These standards, previously used for certain types of contracts, are now replaced by the new comprehensive framework provided by Ind AS 115. Organizations that were previously using these standards will now transition to the guidance offered in Ind AS 115 for all contracts with customers.

Implementation Timeline and Future Outlook

Ind AS 115 was initially deferred by the NACAS and notified for implementation starting from April 1, 2018. This means that organizations began adopting the new standards from this date, and the previously used standards, Ind AS 11 and Ind AS 18, were effectively withdrawn. There is a possibility that Ind AS 115 may be deferred again, and this remains to be determined.

Summary

In conclusion, the implementation of Ind AS 115 has significantly altered the revenue recognition landscape. While Ind AS 11 and Ind AS 18 have been withdrawn, the new standard provides a more robust and comprehensive framework for revenue recognition, enhancing consistency and transparency in financial reporting.