We are setting up a factory of scooters, the scooters in this factory are sold for ₹1 lakh. A Maintenance Contract for five years is also given for ₹50,000. If the general annual maintenance is paid at the time of purchase of scooters, a sum total of ₹120,000 is charged from the customer. How to recognize revenue?

As per IND AS 115, the transaction price i.e. ₹1,20,000 will be divided in the proportion of relative standalone prices. ₹120,000 will be divided in proportion of 100,000: 50,000 Price of scooter = 80,000 Price of general maintenance = 40,000 REVENUE RECOGNITION CRITERIA SCOOTER – ₹80,000 for the scooter will be recognised immediately on the…...

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