Dear all,
I am a CA working as A/c Manager. We are selling commercial vehicles.
We are directed by our statutory auditor (One of the Big 4),to recognise the sales revenue only on the basis of Delivrey of vehicles, not on Invoice basis. Normally the delivery of goods takes a couple of days after receivieng the amount. ( There is no credit sales).
Out Auditors argue that the risk and reward lie on us till the delivery take place, therefore revenue can nto be recognised.
But as per the AS 9, the revenue can be recognised at the time of sale where the property in goods transferrs to the buyer. ( not the possession of goods). Further not to recognise sales where there is a significant uncertainity of receipt of amount from the customer. But in our case there is no uncertainity on receipt and we keep the vehicle in our yard just to complete the registration procedures.
If I follow Paragraph 11 (i) & (ii) of AS9, I have to recognise the sales at the time of creating invoice. But we are presenting the Financial Statements (to our Share holders) on the basis of Delivery. Is it correct?
is there any case law for this issue?
Thanks in advance
Prakash
CAclubindia
