Briefly explain IndAS 115

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IndAS 115 is a new revenue recognition standard that replaces the existing IndAS 18 and IndAS 11.

IndAS 115 is applicable to all entities that recognize revenue from contracts with customers.
It provides a single, comprehensive framework for revenue recognition across all industries.
The standard introduces a five-step model for recognizing revenue from contracts:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
5. Recognize revenue when the performance obligations are satisfied
IndAS 115 also requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
The standard aims to improve comparability, transparency, and consistency in revenue recognition practices.
Example: A software company that sells licenses to customers will need to apply IndAS 115 to determine when and how to recognize revenue from those license sales.

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