Issue 26 | September 2018 | KPMG | IN
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Issue 26 | September 2018


Revenue is considered as one of the key benchmarks for performance. The new revenue standard, Ind AS 115, Revenue from Contracts with Customers introduces a single comprehensive model of accounting for revenue arising from contracts with customers and supersede the current revenue recognition guidance. In this edition of Accounting and Auditing Update (AAU), we focus on the automotive sector companies. Ind AS 115 is likely to throw up multifaceted challenges on the automotive sector from an accounting perspective. Our article on this topic highlights the significant impact areas (e.g. determination of performance obligations and variable consideration, etc.) where current guidance in Ind AS is expected to change due to implementation of Ind AS 115.

The three month period ended 30 June 2018 marks the first quarter of financial results as per Ind AS 115 published by the listed companies under Ind AS road map. With an aim to capture emerging trends and practices we analysed the financial results for the period ending 30 June 2018 of the BSE 100 companies. The BSE 100 companies are among the first group of companies to report revenue under Ind AS 115 starting quarter ended 30 June 2018. Our article points out that the impact presented in the first quarter results (on the basis of the results complied) is quite insignificant and this could be due to a combination of factors such as the transition approach adopted by the companies or that their existing revenue recognition policies are in line with requirements under Ind AS 115. We would expect companies to provide more disclosures relating to Ind AS 115 with year-end financial results.

The publication also casts lens on accounting for Property, Plant and Equipment (PPE). The accounting for PPE has been aligned under Accounting Standards and Ind AS. Both these standards on PPE lay a lot of emphasis on capitalisation of directly attributable expenses and to apply component accounting when depreciating PPE. Therefore, our article highlights key elements of directly attributable cost of PPE and the guidance on component accounting.

Our publication also carries a regular synopsis of some recent regulatory updates.