AS-9 – Revenue Recognition

This standard deals with the basis for recognition of revenue in the statement of profit and loss of an enterprise. It lays down the conditions to recognise revenue by sale of goods, rendering of services, resources yielding interest, royalties and dividends. Revenue should be recognised for sale of goods or services only when the collection is reasonably assured and (i) the property in goods is transferred from seller to buyer (ii) there is no uncertainty regarding the amount of consideration that will be realised from sale of goods. In the case of services rendered either completed service contract method or proportionate service contract method may be adopted for revenue recognition. In the case of revenue by way of interest, the credit is taken on a time proportion basis taking into account the amount outstanding and the rate applicable. In the case of royalties, revenue is recognised on approval basis in accordance with the terms of the relevant agreement. The revenue is recognised for dividend once the right to receive dividend is established.