M/s XYZ Pvt. Ltd. sold goods to M/s ABC Pvt Ltd. Later M/s XYZ submitted a Revised price quotation for the goods of the same consignment which was sold to M/s ABC Pvt. Ltd. in January 2012. But M/s XYZ Pvt. Ltd received the approval of the price revision for the same consignment in June 2012. Whether the sale in revised amount is to be shown in F.Y 2011-12 or in F.Y 2012-13?
Regards,
Devendra Kulkarni
Certainty of Price revision wasnt present in the financial year 2011-12. Therefore the price revision ll be recognised
only in the year 2012-13.
The revised price is not a case of error or ommission thus it is not a prior period item, as per AS-5.
If Buyer is ready to accept the increased price, Seller should send an invoice for Differencial amount (Revised price - old price).
The differential amount should be booked as income in financial year in which both party agreed for difference.
Thus
old price should be booked as sale in year 2011-12
and (Revised - Old) should be booked as sale in 2012-13
In my point of view, sale should be recognised in FY 2011-12 since these are events occuring after B/s date but circumstance exist prior to B/s date.
Since price revision has been conveyed in Jan 12, though approved after B/s date, need to be accounted in FY 11-12
Other views welcomed.
In my opinion, AS -4 is applied in the case of matarial events occuring after balance sheet date to Financial statement approval date, which may influence the decision of stake holders. The case presented by Devender does not seem to be material.
Thus
old price should be booked as sale in year 2011-12
and (Revised - Old) should be booked as sale in 2012-13
as much i understand Accounting Standards
if power to increase price of goods sold lies with seller then it should be booked in the FY 2011-12...
and if power to increase price of goods sold lies with Purchaser then its shall be booked in FY. 2012-13 when approval received, only differential amount shall be booked
If the approval of buyer was likely during Jan 11, then the sale should be booked in FY 2010-11
otherwise the sale should be booked in Fy 2011-12, because only then the certainity of increased amount is established.
I think more than AS 4, the applicability of AS 9 is more apt and suitable.
If a Fixed Asset(vehicle , mobile) is purchased in the name ot the directors and not in the name of the company.
Should depreciation will be charged and asset will be shown in the balance sheet if the asset is purchased in the name of the director?
Please rply
Strongly not.
During audit, we check whether assets is owned by the company or not. When Company does not have ownership, how can depreciation be allowed.
As per the Prudence Concept & AS 9 Revenue can be recognized only when it is absolutely certain that the same will materialize.
Since the Price revision was accepted only after the year end the same should be accounted for in the following year!!!
CAclubindia
