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Plz help out to sort out this situation

AS 509 views 1 replies

Shah Arpit

student

28 Points Joined September 2010

How to recognise revenue in this situation ?

In some businesses some savings installment scheme runs to sale product by adding one more installment in all installments. Now how to record so much big amount of sale in one or two days...of whole period installment.

Example: A jewellery shops run such savings scheme of installment amount of Rs. 1000 for 11 months and by adding 1 more installment amount , in total of Rs. 12000 sale gold to each customer in the end of scheme. Now if its run for 300 customers then in total it amounts Rs. 36,00,000. Now how to record such receipts/sale in the accounts???

Replies (1)

ISHAN ARORA

ARTICLE

22 Points Joined March 2009

as per AS 9 revenue on sales is recognised as and goods are delivered along with risk and rewards( like change in price of gold ) and there is proper certainity that revenue will be collected(installments will be received contineously)

The scheme u r talkin about is that launched by pc jewellers

if gold is given on the 1st installment then whole 36 lac has to be recorded as revenue(whch doesnt hapns in ds scheme)

in these schemes gold is given later on so there is no delivery althoughrisk and returns r transfered by specifing gm of gold in scheme, if writn in scheme that gold is kept at buyers request and he will pay installments in future thn it is HP sales, if writn that gold is transfered as and whn installments are complete thn amount recvd is advance under a contract and should be recognised as sales whn installments complete andgold is transfered, till thn its advance