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
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- Spring '20
- A Ltd, Moon Ltd