I have imported and sold the goods on high seas basis. Since the Bill of Entry has been filed by the buyer, the import has not been completed and goods were never received and become stock in trade. In this situation the HSS has not been included in turnover and net income has been shown as trading income. Whether this accounting treatment is correct?
In this regard consider the following accounting policy of some companies: "Sales made on high seas basis delivered to the customers directly and not held in stocks are not included in the Sales / Turnover and are included on net basis in other income or as the case may be other expenses."
no the treatment is not appropriate as stock whether received or not is part of your inventory till ownership of such stock is not transferred. when goods were on high sea, the claim for stock was with you and you were the owner for such stock, so it should have been accounted in your books. stock even with third parties are to be shown in books of the owner.