Accouting treatement for Sale of equipment

This query is : Resolved 

07 March 2008 Re sir\madam
we are authorised distributor of compressor and our clients are goverment bodies where we billed the client on 100% basis as per po term but, as per po payment terms our client only gives 90% amt against delivery and 10% after 6months to 1 years period after despatch
since we bill 100% our trunover increase and since we receives only 90% our cash flow get disturbed can we show remaining 10% as contingency provision ? since the 10% receivable is against performance bank guarantee and completion of erection and commissioning and acceptance by Client.
Since this affects the outflow and in form of heavy tax burden if the 10% amt turns in lakhs will we can postpon the tax liability to that extent please resolved the query to the earliest

07 March 2008 No it cannot be shown as contingency. The balance 10% will be carried as outstanding debtors.

07 March 2008 You have to account for income in full and offer it for assessment.


07 March 2008 PL. OFFER 90% AS INCOME AND 10% AS INCOME ACCRUED BUT NOT RECEIVED.
ONCE THE 10% IS DUE, TREAT IT AS INCOME AND DR.INCOME ACCRUED BUT NOT RECD.
BUT IT IS NOT POSSIBLE TO TREAT IT AS CONTINGENCY.
R.V.RAO

07 March 2008 SINCE FOR THE 10 % THERE IS NO SUCH CONTIGENCY TO MAKE PROVISION.THE BALANCE 10% ARE DEBTORS WHICH WILL BE RECOVERED LATER ON

13 March 2008 the query is further modified

27 May 2008 agree with Mr. R.V. RAO, A.S. 2 also says that

28 May 2008 majority of sales of compressor i.e project equiment sales occures in the month of jan to march if the 10% stuck up in debtors for further 6 months for which tax laibilty payable in month of march as advance tax how to postpon the tax laibility by givining proper accounting treatement for the 10% sales which is recoverable after commissioning of the project equiment which takes 6 months to 1 year also




You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CCI Pro
CAclubindia's WhatsApp Groups Link


Similar Resolved Queries


loading


Unanswered Queries