ICDS IV deals with the basis for recognition of revenue which is earned by performing business activities like sale of goods, rendering of services, use of entity’s resources by other persons yielding interest, the royalty or any other such form of income.
For the purpose of this ICDS, following disclosures need to be made:
|Sl. No.||Basis||ICDS IV||AS 9|
|1.||Method of recognition||Three methods: percentage completion, straight line and recognition when service contract is completed or substantially completed in case of service contract not more than 90 days.||Two methods: completed service contract method and proportionate completion method|
|2.||Recognition of interest or refund of any tax||Interest on refund of any tax, duty or cess shall be deemed as the income of the previous year in which such interest is received.||Interest or any other income arising will be accrued and recognized on the time basis.|
|3.||Exclusion||ICDS IV does not deal with the revenue recognition which is dealt by the any other ICDS. It does not specifically provide revenue of insurance companies.||One of the exclusion of AS 9 is it does not deal with recognition of revenue of insurance companies arising from insurance contracts|
For further reading on these series, check out our next article on ICDS V.