Method of accounting
This query is : Resolved
05 March 2012
There is a realty company which sells plots of land on installment basis. It follows the practice of recognizing sale when the sale deed is executed. Till sale deed is executed it recognizes the amount received in installment as advance received. Is this a correct method of accounting? Is there any other better method of accounting?
05 March 2012
You shall be required to examine revenue recognition AS for the same.. i am of the opinion that revenue to be recognized at the time that right, risk, possession and rewards are transferred or sale deed is registered.. which ever is earlier.. you should also be assured about the receipt of the funds and the same should not be in abeyance.. based on this the same shall be determined.
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