Realisation concept..

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

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.?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

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.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2011 Can you explain it with an example, figures, so that it'll be easy to understand the concept.

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2011 I mean it's A/cing treatment?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

11 November 2011 Lets take your example.

Order received on 14th April, 2011 for supplying 50,000 units. total price Rs. 500 lakhs.

On 20th May, goods dispatched to buyer.

Payment received on 30th June.

Accounting Entries:

14th April - No entry

20th May

Buyer A/c Dr.
To Sales
(Revenue recognised)

30th June

Bank A/c Dr.
To Buyer
(Consideration realised)

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Jayanti Visani

Sreekumar J Pai

damodara rao tedla

CA K GIRIDHAR

UPENDRAN YADAV

Subscribe Now

Realisation concept..

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA