When an Export Sale is to be considered as revenue ? is it on the day the goods leave the customs port or the day on which it reaches the destination port or when it crosses 200 nautical miles from indian territory.?
Pls some one clarify this.
K B K (CA final, CWA Final) (53 Points)
29 December 2009When an Export Sale is to be considered as revenue ? is it on the day the goods leave the customs port or the day on which it reaches the destination port or when it crosses 200 nautical miles from indian territory.?
Pls some one clarify this.
MAGESH.G
(STUDENT)
(195 Points)
Replied 29 December 2009
It all depends on the type of contract that u enter into with the Foreign party.
If it is a CIF Contract, all risks and rewards pass on to the buyer only when the goods reach at his port. So u can recognise the revenue on that day.
If it is a FOB Contract, once u deliver the goods to the Sending Ship, u can recognise revenue.
If its an Ex-factory Sale, u can book revenue once the goods are removed from the Factory
Correctme if i am wrong.
Amir
(Learner)
(4016 Points)
Replied 29 December 2009
MAGESH IS RITE..JUST WANT TO ADD THAT THE DECISIVE EVENT IS WHEN THE OWNERSHIP (i:e ALL RISK & REWARD ASSOCIATED WITH THE OWNERSHIP) IS TRANFERRED..
Timing of revenue recognition as described by AS 9 is when all the following conditions are satisfied:-
1) Amount can be MEASURED with Certainity.
2) There must be certainity of COLLECTION
3) OWNERSHIP must have been TRANSFERRED to the buyer.
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