Revenue Recognition

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Pritam saha (Querist)
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18 July 2011 Whether Goods delivered but not billed can be shown as sales at year end ? Please provide reference from AS 9 or elsewhere.

BALAJI R

BALAJI R (Expert)
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19 July 2011 That can be treated as sales as per para 11 of AS 9. As per this para the following two conditions must be met to recognise the revenue.
(i) the property in goods has been transferred or significant risks and rewards have been transferred to the buyer. and

(ii) no significant uncertainty exists regarding the amount of consideration.

The property in goods gets transferred to the buyer when risks and rewards are transferred. Usually risks and rewards get transferred on completion of delivery of goods. Hence, this can be treated as sales. However, if there is any acceptance tests prescribed in the contract, recongnise revenue after completion of acceptance tests.

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