Accounting for Revenue under AS-9

Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends.

Revenue is measured by the charges made to customers or clients for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration.

This Statement does not deal with the following aspects of revenue recognition to which special considerations apply:

  • Revenue arising from construction contracts;
  • Revenue arising from hire-purchase, lease agreements;
  • Revenue arising from government grants and other similar subsidies;
  • Revenue of insurance companies arising from insurance contracts.

Examples of items not included within the definition of “revenue” for the purpose of this

Statement are:

  • Realised gains resulting from the disposal of, and unrealised gains resulting from the holding of, non-current assets e.g. appreciation in the value of fixed assets;
  • Unrealised holding gains resulting from the change in value of current assets, and the natural increases in herds and agricultural and forest products;
  • Realised or unrealised gains resulting from changes in foreign exchange rates and adjustments arising on the translation of foreign currency financial statements;
  • Realised gains resulting from the discharge of an obligation at less than its carrying amount;
  • Unrealised gains resulting from the restatement of the carrying amount of an obligation.
Recognition of Contract Revenue and Expenses
Sale of Goods

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