whether export incentives will form part of sales?
This query is : Resolved
26 April 2011
Dear Sir,
my company is manufacturing co. and exporting its product to various countries. Co gets advance licence on which co. imports it raw material and then export.The accounting followed is that when import is done license expenses are debited in Profit and loss and credited to advance licence on hand account and when export is done incentives are booked as part of sales and advance licence is debited.My query is whether this accounting is proper or incentives or obligation should not be booked as it is contingent liability. please suggest me if any other method can be adopted as it is affecting profits of the company?What does accounting standard says?please it is urgent. thanking you in advance.
my company is manufacturing co. and exporting its product to various countries. Co gets advance licence on which co. imports it raw material and then export.The accounting followed is that when import is done license expenses are debited in Profit and loss and credited to advance licence on hand account and when export is done incentives are booked as part of sales and advance licence is debited.My query is whether this accounting is proper or incentives or obligation should not be booked as it is contingent liability. please suggest me if any other method can be adopted as it is affecting profits of the company?What does accounting standard says?please it is urgent. thanking you in advance.
26 April 2011
The query seems to be related to revenue recognition for which AS-9 may be followed. You may also see the ICAI's opinion ,though not on identical facts,in
https://www.icai.org/resource_file/96501588-1594.pdf
https://www.icai.org/resource_file/96501588-1594.pdf
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