we have recognised revenue for Fy 2015-16 on a service contract for 5 Lakhs, but due to certian issues the customer claiming deficiency of service agreed to pay only 3 Lakhs. we issued a credit note for 2 Lakhs in FY 2016-17.
in the financial statements of 2016-17 / March 17 is it appropriate to reverse income as per AS9 or any standard is applicable.
You may write off the amount as 'discount due to poor quality', or any other name.
I think I misunderstood. It's about 'services not provided'. Right!
Then yes, you can reverse the income recognised earlier. However, you should not have recognised it in first place without providing services first and without its certainty of receipt.
Revenue once recognised can not be reversed.
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