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HT Ltd. sells Product A at ₹1,000/unit; if the customer buys more than 100 units in the year, the price RETROSPECTIVELY drops to ₹900/unit. In Q1, HT sold 10 units and estimated the customer would not exceed the 100-unit threshold — recognising revenue at ₹1,000/unit. In Q2, the customer (after a new acquisition) buys 50 more units and HT now expects the threshold WILL be crossed. Revenue for Q2 is:
A₹44,000 — ₹45,000 (50 × ₹900) minus ₹1,000 cumulative catch-up on Q1's 10 units (10 × ₹100 price reduction)
B₹54,000 — 60 cumulative units × ₹900 per unit (full retrospective on all sales to date)
C₹50,000 — 50 units × ₹1,000 per unit (no change until the threshold is actually crossed)
D₹45,000 — 50 units × ₹900 per unit, with no adjustment to Q1
Answer & Solution
Correct answer: A. ₹44,000 — ₹45,000 (50 × ₹900) minus ₹1,000 cumulative catch-up on Q1's 10 units (10 × ₹100 price reduction)
When estimates of variable consideration change, Ind AS 115 requires a cumulative catch-up. Q2 revenue = current quarter sales at new price (50 × ₹900 = ₹45,000) MINUS the reduction on previously-recognised revenue (10 × ₹100 = ₹1,000). Net Q2 = ₹44,000. The retrospective price applies to all units once expectations cross the threshold.
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