ICAI clarifies on Ind AS 115 regarding real estate sector

Coming out with a clarification on Ind AS (Indian Accounting Standard) 115 in the context of real estate sector, chartered accountants' apex body ICAI on Friday said recognition of revenue as construction progresses is possible considering the circumstances of individual case. The Ind AS 115 pertaining to revenue recognition came into effect from April 1. "The ICAI would like to clarify that the Ind AS 115 does allow recognition of revenue using Percentage of Completion Method (POCM) and has explicit and specific requirements to recognise revenue, where performance obligation is satisfied over a period of time," the institute said in a release. The ICAI said an entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, in case the customer simultaneously receives and consumes the benefits provided by the entity's performance.