Revenue recognition

This query is : Resolved

KALYANA SUNDARAM.T.V. (Querist)
Follow

02 February 2012 I have received an purchase order from the poland company towards supply of equipment in December - 11.

Part of the material say 50% to 60% will be supplied before this march and balance will be supplied in next year. However the total installation will take place only in next year.

As per the Purchase Order the terms of payment is as follows:

1. 20% advance against submission of advance bank guarantee valid till the date of supply.
2. 10% against approval of pre-manufacturing drawing
3. 50% against supply of equipment.
4. 10% against installation
5. 10% against Commissioning and submission of PBG for 10% of the order value.

Whether i can raise a final invoice based on the above event completion and recognize the income at respective stage in my books of account.

If not please provide me the correct methodology to enable me to pass the correct entries in my books of accounts.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

12 May 2012 For recognising revenue the essential criteria is that the goods must have passed to the buyer. In your case, the goods will pass to the buyer on final installation.

Accordingly, revenue will be recognised when the installation is complete and has been accepted by the customer.

The amounts received at various points shall be treated as advance.

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

HITESH NIRANJAN SAHU

REGIWISE CONSULTANTS PVT LTD

R M Shekhaliya

CA Aakarsh Jain

SUMAN SAHA

Subscribe Now

Revenue recognition

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