Revenue recognition as7 - most urgent

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

24 November 2014 The Company is into Construction ( service Industry)
Example Case During FY 2013-13

Revenue billed to Contractor - 1000 Rs.

Work Certified by Contractor - 800 Rs.

Debit note raised by Contractor - 50 Rs.

Revenue as per POC - 900 Rs. (Hence revenue recognised in PL should be 900 and 100 should be shown as Billing in excess of revenue?)

Now my query is -
my Book shows debtor of 1000.
But debtor has confirmed 750 (800 revenue and less 50 debit note)
So what is the accounting treatment for the difference of 250 between the books and statement by debtors.

Totally confused. Appreciate quick response

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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24 November 2014 Follow the points below

1. Without work certification from customer you cannot bill, you can reverse first uncertified portion of Rs.200 ( 1000-800) and show the amount of Rs.200 as work in progress

2.Account the debit note from customer Rs.50 in the books.

after this 2 steps your Rs.250 difference will go

Now come to revenue as per POC (AS-7)

Recognise the Revenue as Rs.900 and difference between Rs.900 and Rs.800 is Rs.100 show under other current asset on the financial reporting date as unbilled revenue and reverse the next day

Querist : Anonymous

Querist : Anonymous (Querist)

26 November 2014 Dear Ramesh,

Your Reply sounds very logical.

Thanks for your immediate help.

Thanks

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