Unwarned income

expenses related to unwarned income is recognised in which year CY or when the income is earned ?
Replies (5)
Quick Summary
This discussion clarifies the accounting treatment for expenses associated with unearned income. It explores whether expenses should be recognised in the current year or when the income is earned, particularly for long-term contracts. The conversation touches upon deferred revenue, the capitalisation of borrowing costs, and how to handle revenue and expenses for multi-year supply agreements.

Is it unearned income?

Dr Bank

Cr. Deferred revenue

In the same year. 

I am asking about the expenses related to unearned income

If it is a project, and if it is borrowing costs, it will be apotalised. What kind of expenses are they. 

A company get a contract to supply 10000 kg of goods for 3 yrs unevenly how the revenue and expense is recognised

Expense is purchase. If revenue is given in advance then

Dr. Bank

Cr. Deferred revenue

But if the revenue is givem on credit basis

Dr. Receivales/debtor 

Cr.  Sales account.

If they paid cash

Dr. Bank

Cr. Sales 

 

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