Ind AS 115, Revenue from Contracts with Customers is effective for accounting periods beginning on or after 1 April 2018 and will supersede the current revenue recognition guidance. In this edition of the Accounting and Auditing Update (AAU), we focus on the media and entertainment sector. The media and entertainment sector is fairly diverse and includes radio and television broadcasters, print and online media, advertising agencies and content production companies. Our article highlights key areas that are likely to get affected, e.g. determination of performance obligations, accounting for non-cash consideration, separation of significant financing component, etc.
The publication also carries an article on derecognition of a financial liability. The article highlights the evaluation and accounting for derecognition/modification of a financial liability, including treatment of modification fees. Ind AS 109, Financial Instruments, provides specific criteria for determining derecognition and requires entities to perform a quantitative and qualitative analysis for debt modification including the fees incurred on modification. Additionally, the standard provides limited guidance regarding the treatment of fees incurred due to modifications.
From 1 April 2017, revised standard on auditing SA 570 (Revised), Going concern is applicable for audits of financial statements. The revised standard has increased the scope of the auditor’s report and casts a new requirement on auditors to evaluate whether disclosures are adequate in the situation when there are material uncertainties. The article on this topic explains the key considerations relating to going concern assumption and situations that enhances the responsibility of the management and the auditors.
Additionally, our publication carries a regular synopsis of regulatory updates.