Identify the impairment loss population before drafting the note
Ind AS 115 paragraph 113(b) requires disclosure of impairment losses recognised under Ind AS 109 on receivables or contract assets arising from contracts with customers, separately from impairment losses from other contracts. Paragraph 113 does not require duplicate note disclosure where those amounts are presented separately in the statement of profit and loss in accordance with other Standards. This is a reporting-period loss disclosure, not merely the closing loss-allowance balance.
Read the applicable text: ICAI Ind AS 115: paragraphs 110–113 and 127–128 ICAI 2025–26 compendium, Volume I.
Distinguish revenue from the credit-loss line
Paragraph 113(a) separately addresses revenue from customer contracts and its distinction from other revenue sources. Credit impairment on a valid customer receivable should not be used as an unexplained reduction of the disclosed revenue amount. Whether a pricing concession, contract modification or other fact changes revenue requires its own applicable analysis; not every short receipt is a credit loss.
Map receivables and contract assets
Use customer-contract identifiers to separate trade receivable and contract-asset impairment from losses on other contracts, such as a separately analysed loan. Do not infer that every debit balance in a customer ledger arose from an Ind AS 115 contract. The accounting classification and the source of the balance both matter.
Reconcile expense movements and allowance balances
Opening allowance plus recognised loss and other supported movements can differ from closing allowance after write-offs or other changes. A write-off using an existing allowance is not automatically another current-period impairment expense. Retain the Ind AS 109 measurement working; this disclosure process does not replace the required measurement analysis or prescribe an ECL percentage.
Do not combine contract-cost impairment mechanically
An asset recognised for costs to obtain or fulfil a contract is distinct from a receivable or contract asset. Ind AS 115 paragraphs 127–128 contain separate disclosure requirements for recognised contract-cost assets, amortisation and impairment. Keep those amounts in their appropriate disclosure population rather than assuming that every account with 'contract' in its name belongs in paragraph 113(b).
Make the location and total reproducible
Identify whether the required split appears in the notes or is presented separately in the statement of profit and loss in accordance with other Standards, and cross-reference it clearly. Paragraphs 111–112 address useful detail and avoiding duplicated information already provided under another Standard. Those principles do not justify hiding customer-contract losses inside an unexplained aggregate of unrelated impairment expenses. Examples below assume valid underlying recognition and measurement; they test classification and reconciliation only.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Split customer and other losses
Current-period impairment losses are ₹8 lakh on customer receivables, ₹2 lakh on customer contract assets and ₹3 lakh on a separately analysed loan. Customer-contract losses total ₹10 lakh and other-contract losses ₹3 lakh, reconciling to ₹13 lakh. The combined expense alone conceals the required population split.
Illustrative example 2: Closing allowance is not the expense
Opening customer allowance is ₹5 lakh, current recognised impairment loss ₹3 lakh and write-offs against allowance ₹2 lakh, with no other movements. Closing allowance is ₹6 lakh. The ₹3 lakh expense, not the ₹6 lakh closing balance, is the reporting-period loss in this simplified working.
Illustrative example 3: Keep revenue gross of credit losses
Recognised customer-contract revenue is ₹100 lakh and separately measured credit impairment ₹4 lakh. A draft revenue figure of ₹96 lakh obtained by deducting that loss is not a substitute for disclosing revenue ₹100 lakh and the impairment separately on the assumed facts. A pricing concession would require its own analysis.
Illustrative example 4: Separate contract-cost assets
Customer receivable impairment is ₹1.2 lakh, customer contract-asset impairment ₹0.8 lakh and contract-cost asset impairment ₹0.5 lakh. Paragraph 113(b)'s customer financial-asset population is ₹2 lakh; the ₹0.5 lakh cost-asset item needs its separate applicable disclosure, not a ₹2.5 lakh undifferentiated figure.
Illustrative example 5: Avoid duplicate note totals
A P&L split already shows customer losses ₹7 lakh and other losses ₹2 lakh. A supporting note repeats the same ₹7 lakh, not a new charge. Total recognised impairment remains ₹9 lakh, not ₹16 lakh. Use the cross-reference to explain the same amount once.
Illustrative example 6: Resolve a mapping gap
The impairment ledger total is ₹12 lakh. Supported mapping identifies ₹8 lakh customer-contract losses and ₹3 lakh other-contract losses, leaving ₹1 lakh unresolved. Do not allocate the remainder to customers simply to balance; identify its source before finalising the split.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the reporting period | P&L and ledger cut-off. |
| 2 | Establish the loss ledger total | Recognised impairment movements. |
| 3 | Map customer receivables | Contract-origin evidence. |
| 4 | Map customer contract assets | Performance and billing classification. |
| 5 | Separate other contracts | Loans and other supported populations. |
| 6 | Separate contract-cost assets | Paragraphs 127–128 working. |
| 7 | Reconcile allowance movements | Opening, expense, write-offs and closing. |
| 8 | Check revenue presentation | No unexplained credit-loss netting. |
| 9 | Choose a clear disclosure location | Notes, or separate P&L presentation under other Standards, with cross-reference. |
| 10 | Resolve unexplained differences | Final population and total reconciliation. |
Sixteen practitioner FAQs
1. Which paragraph requires this loss split?
Ind AS 115 paragraph 113(b).
2. Which measurement Standard does it refer to?
Ind AS 109.
3. Does it cover both receivables and contract assets?
Yes, where they arise from customer contracts.
4. Are all customer-ledger debits automatically included?
Establish the balance's actual origin and classification.
5. Is closing allowance the reporting-period impairment loss?
No; reconcile the movement and recognised loss.
6. Does every write-off create another expense?
Not where it uses an existing allowance without a further loss, on the stated facts.
7. Can other-contract impairment be hidden in the customer total?
Keep the required separation.
8. Is a contract-cost asset a contract asset for this purpose?
They are distinct accounting populations.
9. Where are contract-cost disclosures addressed?
The separate requirements include paragraphs 127–128.
10. Must the same split be printed twice?
Paragraph 113 recognises separate P&L presentation in accordance with other Standards; avoid unexplained duplication.
11. Can a note repeat an amount for explanation?
Yes; make clear that it is the same recognised charge.
12. Can impairment simply reduce the revenue disclosure?
Do not use unexplained netting to replace the required revenue and loss information.
13. Is a pricing concession always impairment?
No. Analyse the actual facts under the relevant requirements.
14. Do the examples prescribe ECL rates?
No. Measurement is assumed independently supported.
15. Can an unmapped remainder be assigned arbitrarily?
Resolve its source before finalising the note.
16. What is the final reconciliation?
The customer, other-contract and separate cost-asset populations tie to their appropriate recognised amounts.
Official sources
ICAI Ind AS 115: paragraphs 110–113 and 127–128 ICAI 2025–26 compendium, Volume I