AS-7 provides for reversal of revenue

Reversal of revenue AS-7 provides for reversal of revenue on account of uncertainty arising on realisability of contract revenue which was already recognised as income.Where contract revenue already recognised as income is subsequently written off in the books of accounts as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue.


Comments

Post a Comment

Popular posts from this blog

Items that will not be re-classified to profit or loss

Image
Items that will not be re-classified to profit or loss.” Book Profit for the purpose of Section 115JB is “Net Profit before Other Comprehensive Income”. In order to tax items of Comprehensive Income that will not be routed through Profit And loss, book profit of the previous year shall be increased/decreased by all amounts credited/debited to other comprehensive income in the statement of profit and loss. For particular liabilities designated as at fair value through profit or loss, the amount of the change in fair value that is attributable to changes in the liability’s credit risk.
Read more

Section 53A of the Transfer of Property Act

Image
The method adopted by the assessee, therefore,cannot be regarded to comply with the ownership so as to get an enforceable right to receive the balance of sale consideration, the question of applying Section 53A of the Transfer of Property Act would not arise so as to recognise the revenue before actual registration. Recognition/identification of income under the Income-tax Act 1961 is attainable by several methods of accounting. Project completion method [PCM] is one such method.
Read more

Reverse acquisition

Image
Reverse acquisition takes place when a private entity wants to become a public entity but does not want to register its equity shares. In such case,private entity approaches a public entity,the one which is listed, to acquire its (private entity’s) equity interests in exchange for the equity interests of the public entity In a reverse acquisition, the entity issuing equity interests is legally the acquirer, but for accounting purposes is considered the acquiree. Accounting for business combination is done from the perspective of accounting acquirer and not legal acquirer.
Read more