11 November 2011
An order is received in the month of April for a particular commodity. The sale price is realised in the month of June. The commodity is transferred in the month of May. Money will be deemed to have been realised in the month of May and not April to June. . Can anyone explain this concept to me.?
11 November 2011
This problem is covered by AS 9, Revenue Recognition.
As per AS 9 revenue (sale price) is to be recognised when the seller has transferred the property in goods to the buyer, i.e., the risks and rewards associated with the goods have been transferred to the buyer.
Therefore, in the query the ownership is transferred in May and therefore revenue will be recognised in the month of May.