Class Ltd. is a well-established real-estate developer and builder engaged in residential and commercial projects. In the financial year 2025, the…

AS 9 on 'Revenue Recognition' states that revenue is recognised when it is earned and there is reasonable certainty of its collection, arising from the ordinary activities of an enterprise. In this case, Class Ltd. is in the business of buying and selling properties. The land purchased and sold forms part of its inventory. The sale of land at 360 crore is a transaction arising from ordinary activities of the company. Therefore, the revenue is recognised when the sale is completed and collection is reasonably certain. In the light of AS 5, this transaction will not be treated as an extraordinary item, because it arises from the ordinary course of business. However, if the amount is of such size, nature, or incidence that its disclosure is relevant to explain the performance of the enterprise, the nature and amount of such items should be disclosed separately. Hence,360 crore realised from the sale of land shall be recognised as revenue in the year in which the sale is completed.