Hi,
Could any body give me a good example for revenue recognization.
if you give me case study it will really helpful.
Regards
Anjan
Revenue Recognization
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- Joined: Tue May 15, 2007 7:45 am
- Location: United Arab Emirates
Hi
A Good example for revenue recognition is sale of Goods on Hire Purchase basis. This is for Invoicing in Advance
If you are a dealer in say two wheeler or Four wheeler vehicles and you sell the goods on 12 Installements, you do not want to recognize all revenue now itself when you book the Invoice and spread it across over the Installment period
In this case it will be
First entry as on 01-JAN-2007
Receivales A/c Dr 12000
Unearned Revenue A/c Cr 12000
31-Jan 2007
Unearned Revenue A/c Dr 1000
Revenue A/c Cr 1000
28-Feb-2007
Unearned revenue A/c Dr 1000
Revenue A/c Cr 1000
till Dec 2007
A Good Example for Invoicing in arrears is say you are holding a big multi storeyed apartments and you need to collect service charges from all tenants of 1200 USD per annum and you want to recognize the revenue immediately but book the Receivables in arrares to the tenants. then
On 01-JAN-2007
Unbilled Receivables A/c Dr 1200
Revenue A/c Cr 1000
31-Jan-2007
Receivables A/c Dr 100
Unbilled Receivables A/c Cr 100
28-Feb-2007
Receivables A/c Dr 100
Unbilled Receivables A/c Cr 100
till Dec 2007
Hope this helps
Regards
Sivakumar
A Good example for revenue recognition is sale of Goods on Hire Purchase basis. This is for Invoicing in Advance
If you are a dealer in say two wheeler or Four wheeler vehicles and you sell the goods on 12 Installements, you do not want to recognize all revenue now itself when you book the Invoice and spread it across over the Installment period
In this case it will be
First entry as on 01-JAN-2007
Receivales A/c Dr 12000
Unearned Revenue A/c Cr 12000
31-Jan 2007
Unearned Revenue A/c Dr 1000
Revenue A/c Cr 1000
28-Feb-2007
Unearned revenue A/c Dr 1000
Revenue A/c Cr 1000
till Dec 2007
A Good Example for Invoicing in arrears is say you are holding a big multi storeyed apartments and you need to collect service charges from all tenants of 1200 USD per annum and you want to recognize the revenue immediately but book the Receivables in arrares to the tenants. then
On 01-JAN-2007
Unbilled Receivables A/c Dr 1200
Revenue A/c Cr 1000
31-Jan-2007
Receivables A/c Dr 100
Unbilled Receivables A/c Cr 100
28-Feb-2007
Receivables A/c Dr 100
Unbilled Receivables A/c Cr 100
till Dec 2007
Hope this helps
Regards
Sivakumar
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- Posts: 53
- Joined: Wed Feb 21, 2007 3:38 am
- Location: India
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