How to recognize revenue of Reality Venture agents ? we have margin of Rs. 30000 per Flat and also we have received commission from Builder and they have include commission in Flat price as discount paid to purchaser and those discount is our commission income.
Kindly guide me on the above matter, what entry should i pass in the books of accounts.
For reality business, revenue can be recognised when following conditions met:
1. The sale is consummated
2. Initial and continuing investments by the buyer in the property are sufficient;
3. All the risks and rewards of ownership reside with buyer;
4. There is no continuing duty or involvement by the seller post-sale (after closing); and,
5. There is no future subordination of any buyer receivable
This is applicable for a realestate developer, but if you are just an agent and earn commission of sales, i think you need to concern about commision only in your books of accounts. i.e.
Commision receivable A/c Dr.
To Commision
cash a/c Dr
To Commission Receivable
If the party do the deal through you then:
Cash A/c Dr (Gross Amount)
To party (net amount due to client i.e. less commission)
To Commission
To charges (If any)
Dear All,
Thanks for your valuable guidance.
Pls guide me on the following mater-
1)- What are the direct exp of an Reality Venture Brooking Firm/Co.?
2)- In case of Commission due from Builder for saling flates to Customer's , is this will be right a/c entry for Commission due & Rec.?
Builder A/c Dr
To, Commission Reciviable A/c
(Being Commission reciviable from Builder)
Cash / Bank A/c Dr
To, Builder A/c
(Being Commision Received from Builder Agst Property Sold)
1) All cost, if the agent is responsible for expenses incurred in marketing a property, e.g., leaflets, brochures, ads, Open Houses, etc can be treated as direct expenses.
2) Your entry is against the golden rule of accounting: i.e. Debit all asset and credit all liabilities. Here Receivable is asset and you should debit it. Moreover, you are not recognising any revenue under the head Commission. So I think you can follow the jounral entry given in my previous comment.
Commision receivable A/c Dr.
To Commision
(When commission Due)
cash a/c Dr
To Commission Receivable
(Commission Received)
In practical sense, you can also show it as:
ABC Co. a/c Dr
To sales commission
(when commision due) and show ABC CO. under Currsent Asset as Debtors/Receivable on Balance Sheet
Cash a/c Dr
To ABC Co.
(When Commision received)
dear all
Iam taking take care of online sales , the party is releasing the payment after deducting commission and s. tax , pls let me know how to passed necessary entries
CAclubindia
