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A Ltd. and B Ltd. are engaged in the manufacturing of homogeneous plastic bottles. A Ltd. operates in the northern, eastern, and central regions of…

CA Final · Financial Reporting · PYQS · January 2026

A Ltd. and B Ltd. are engaged in the manufacturing of homogeneous plastic bottles. A Ltd. operates in the northern, eastern, and central regions of India. B Ltd. operates in the western and southern regions. To fulfill the demand across India, the companies have a non-monetary exchange arrangement where: A Ltd. supplies bottles to B Ltd. for B Ltd.'s customers in the north, east, and central regions.B Ltd. supplies bottles to A Ltd. for A Ltd.'s customers in the west and south.This arrangement is solely to facilitate regional customer orders, and the products are homogeneous.During the year 2024-2025, for exactly same quantities:Fair value of bottles supplied by A Ltd.:5,00,000Fair value of bottles supplied by B Ltd.:5,20,000 How should A Ltd. and B Ltd. recognize revenue for the exchange for the year 2024-2025 as per Ind AS 115?

(A) (A) A Ltd. should recognize a revenue of 5,20,000 and B Ltd. should recognize a revenue of 5,00,000, based on the fair value of bottles received, as this represents the value of the goods acquired for customer delivery.

(B) (B) A Ltd. should recognize a revenue of 5,00,000 and B Ltd. should recognize a revenue of 5,20,000, based on the fair value of bottles transferred, as they satisfy performance obligations through the exchange.

(C) (C) No revenue should be recognized by either A Ltd. or B Ltd. for the exchange, despite the fair values being - 5,00,000 and 5,20,000 respectively, because Ind AS 115 explicitly excludes such non-monetary exchanges between entities in the same line of business conducted to facilitate customer sales.

(D) (D) B Ltd. should recognize a revenue of 20,000 for the excess fair value received (5,20,000 -5,00,000), since the exchange is not at par and reflects an arm's length transaction.

A Ltd. and B Ltd. are engaged in the manufacturing of homogeneous plastic bottles. A Ltd. operates in the northern, eastern, and central regions of…

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