Santosh Kr.Mishra (To Become a Chartered Accountant) (104 Points)
18 September 2014i hav a clint of real estate developers who develop plots and sale them.
my query at which time i have to book sale & purchase.
Co receive advance for plot from various customers & also given advances for purchase of land.
also co has to pay commission @ 30-40% for selling its projects on PROGRESSIVE basis.
Plz suggest me accounting treatment of sale & purchase (at which time i can book )
Greetings Mr. Mishra,
It all depends upon the nature of these advances.
If the advances received are non-refundable, they are to be booked as revenue i.e. sales are to be booked as per A.S.9. Otherwise they are to be reflected as an obligation in the year end financial statements. A likewise treatment is to be made for purchases.
As the client is paying sales related commission on progessive basis, revenue is also to be recognised on corresponding progressions for complying the matching principle.
Kind Regards.
CAclubindia
