Explain the revenue recognition as per Ind AS 115

Question

Accepted Answer

The standard identifies five steps that an entity must follow to determine when to recognize revenue:

Identify the contract with the customer. An entity must identify the contract with the customer, including the terms and conditions of the contract.
Identify the separate performance obligations in the contract. An entity must identify the separate performance obligations in the contract, which are the distinct goods or services that are promised to the customer.
Determine the transaction price. The transaction price is the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer.
Allocate the transaction price to the separate performance obligations. The transaction price must be allocated to the separate performance obligations in the contract based on the relative standalone selling prices of the goods or services.
Recognize revenue when (or as) the performance obligations are satisfied. Revenue is recognized when (or as) the entity satisfies a performance obligation by transferring a promised good or service to the customer.

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