ICAI clears three new/revised Accounting Standards Interpretations and One Announcement

The Council of the Institute of Chartered Accountants of India (ICAI), at its meeting held recently at Delhi, has cleared the following Accounting Standards Interpretations (ASIs):

i. Accounting Standards Interpretation (ASI) on 'Turnover in case of Contractors' (Re.: AS 7 (revised 2002)) (New)

Accounting Standard (AS) 7, Construction Contracts (revised 2002) deals, inter alia, with revenue recognition in respect of construction contracts in the financial statements of contractors. It requires recognition of revenue by reference to the stage of completion of a contract (referred to as 'percentage of completion method'). The standard is, however, silent on the issue as to what would constitute turnover in case of contractor. This ASI clarifies that the amount of contract revenue recognised in the profit and loss account as per the requirements of AS 7 should be considered as 'turnover'. It may be mentioned that the 'turnover' of an enterprise is considered relevant for certain purposes, for example, determining whether an enterprise is a small and medium sized enterprise (SME) for the purpose of applicability of accounting standards.

See remainder.