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Commission recd from foriegn supplier.

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Querist : Anonymous

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Querist : Anonymous (Querist)
03 February 2013 My client is an agent of foreign goods supplier. His role is to make the product available,install it & provide 2 years free service of the product. In return he gets commission from foriegn supplier. My question is whether the commission recd. by him is income of the receipt yr. or he will defer it over the warranty period?
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CA PARAS BAFNA

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CA PARAS BAFNA (Expert)
03 February 2013 According to AS-9 -there is no uncertainty
about receiving of the revenue,. It should be recognised in the year of its receipt/accrual.

However, under the agreement, he has to provide free service for one more year-so provision should be made for the expenditure on Free Services likely to be incurred during the unexpired period.
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