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📚 Learn/ Paper 1 — Advanced Accounting/ Indian Accounting Standards (AS 1–29)
Microlesson · 5-min read

AS 9 – Revenue from Rendering of Services

## Revenue Recognition: Rendering of Services

Two methods are prescribed depending on the nature of the service:

### Method 1: Proportionate Completion Method

  • Revenue is recognised proportionately as the service is performed
  • Based on the stage/degree of completion at the reporting date
  • Used for continuous services (e.g., teaching, subscription services)

### Method 2: Completed Service Contract Method

  • Revenue is recognised only when the sole or final act of the service is complete
  • Used for one-time services (e.g., installation, repair, delivery)
Service TypeMethod
Teaching service (ongoing)Proportionate Completion
Software installationCompleted Service Contract
Annual Maintenance ContractProportionate Completion
One-time repair jobCompleted Service Contract

> Key principle: The method chosen should reflect the pattern in which service is performed and value is delivered to the customer.

Worked example

### Example 1

A coaching institute charges ₹12,000 for a 12-month course starting April 1. Using proportionate completion method:

  • April 30 (1 month complete): Recognise ₹1,000 as revenue
  • September 30 (6 months complete): Recognise ₹6,000 cumulative revenue

### Example 2

An engineer installs industrial equipment on 15 April and the job is completed on 20 April. Using completed service contract method:

  • No revenue is recognised until 20 April when installation is complete.
  • On 20 April: Recognise full installation revenue.

⚠️ Common exam mistakes

  • Applying completed service method to continuous services — ongoing services should use proportionate completion.
  • Applying proportionate completion to a one-time job — e.g., recognising partial revenue for a repair before it is finished.
  • Forgetting that when performance consists of multiple acts, the proportionate method should weight acts by their significance.
Bare-Act text Para 12 – Rendering of Services · AS 9 – Revenue Recognition (ICAI) · click to expand
Revenue from service transactions is usually recognised as the service is performed, either by the proportionate completion method or by the completed service contract method.
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