accounting for fob contract
This query is : Resolved
29 May 2008
hi
if a party contracted with other party for supply of raw material at FOB price. the other party raises the invoices at full value and not deducted the freight amount. the party booked the entire amount of invoice in its purchases instead of segregating the freight amount and purchase amount. but it also deducted tds on the freight amount but amount of freight not shown as expenses instead it is booked in purchase account. is this treatment is correct?
'
if a party contracted with other party for supply of raw material at FOB price. the other party raises the invoices at full value and not deducted the freight amount. the party booked the entire amount of invoice in its purchases instead of segregating the freight amount and purchase amount. but it also deducted tds on the freight amount but amount of freight not shown as expenses instead it is booked in purchase account. is this treatment is correct?
'
29 May 2008
freight element should be accounted for differently if tds has been deducted otherwise it may be accounted on gross basis.
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