Sir we are a importer. Some shipment of march 2019 release from custom department in April 2019 and Invoice of some expenses relating to these shipment like as shipping line charges were generated in month of March 2019.
kindly suggest to me when theses expenses enter in books of accounts in March 2019 or April 2019(when we book purchase after release of shipment from custom department) ?
03 April 2019
Even though, you book purchase after release of shipment from custom department, the goods will be accounted as - Debit Inventory in transit (Balance Sheet Current Assets) and Credit Supplier Account (Balance Sheet) as on 31-3-2019; however, this entry will be passed only when the transfer of ownership takes place. Two basic types of ownership transfers generally take place. If the transaction results in a "freight on board shipping point," this means that the recipient of the goods will take ownership at the point where the goods are shipped from. The "freight on board destination" transfer of ownership occurs upon arrival of the goods to the purchaser. And the inventory in transit will be transferred to Purchase Account in April 19 when the goods are actually received in Apr 19. If the ownership does not take place as per the contract / purchase order terms, then the clearing expenses incurred in March 19 will be treated as Advance (under current Assets) as on 31-3-19 and transferred to expense entry in April 19 when goods are physically received in the warehouse / godown.
CAclubindia
