Revenue recognition

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CA rahul

BCOM(H) ACA

394 Points Posted on 08 July 2015

Dear member

I have one query with regard to revenue recognition

Assesse being a branch office of the Principal company Located outside India and undertake the sales activity with regard to Software (mobile app) available for sale through electronic download from server /website. Since product is available online on Common website of the company so it can be say that Product belong to principal company registered outside India. Since sales collection are carried by India sales team and credited to bank account maintained by the Assesse. Now the issue is whether Branch office located is India can booked entire sales consideration or booked the same based on the percentage after entering the agreement with principal company for allocation of revenue

Replies (2)

CA Puru Goyal

CA DISA

142 Points Posted on 07 August 2015

As per AS -9 for recognisation of revenue following conditioned need to be fullfilled:-

1.Ceratinty of collection

2.Transfer of title

3.Effective control

by summing up all things it looks like ultimate responsibility for sales are up to branch office only. In india they are only collecting revenue. In the case if any controversies arises i think only branch office will be resposing to them . So branch should book such sales in their financials.