But registration was done with registrar subsequent

the year. But registration was done with registrar subsequent to Balance Sheet date.
But before finalization, is it possible to recognise the sale and the gain at the Balance
Sheet date? Give your view with reasons.
Solution
Registration could be just a formality and sale is substantially complete on entering
into a sale agreement / deed. In such a case, gain could be recognized in the period
in which such a deed was entered. Else the sale and gain are recognized only in the
period when the property is registered
Q8
Golden Eagle Ltd., has been successful jewellers for the past 100 years and sales are
against cash only. The company diversified into apparels. A young senior executive
was put in charge of apparels business and sales increased 5 times. One of the
conditions for sales was that dealers can return the unsold stocks within one month
of the end of season. Sales return for the year was 25% of sales. Suggest a suitable
Revenue Recognition Policy with reference to AS-9.

Q&A Notes INDIGOLEARN 5
Solution
As per AS 9 revenue should be recognized when there is certainty about
measurability and collectability
• In the Jewellery business there are NO concerns regarding measurability as
well as collectability. Hence Revenue should be recognized in this business,
immediately on sale, in-line with principles outlined in AS 9
• In the apparels business, Sales should be recognized only to the extent of 75%
of items shipped at the time of shipping and balance 25% should be recognized
when there is greater certainty