24 July 2010
Dear sir, our firm is a trading company. we account purchases based on GRN date and not the date of supplier invoice. A supplier bills on 28th march 2010(date of removal from his factory) and the goods are received in April 5th 2010 and accounted on April 5th 2010, will the accounting treatment voilate AS9. does significant risk & reward of ownership pass to the buyer as on 28th march 2010 itself?
This will depend on the agreement between seller and the buyer.
In an ideal situation, buyer accepts the goods only when he received in good condition and sign for the Delivery Note. Until such time, it remains the responsibility of the seller who will show the goods as stock in transit Outward. He may also have insured the goods until it reaches the buyer. There could be specific cases, it could work the other way also. For e.g. the seller may be asking buyer to pick up the goods from his godown and sign at his factory itself as collected. In that case buyer has to show in his books as stocks under stock in transit Inward.
So it depends on how both parties agreed. In the absence of agreement you can take that risk and rewards transfers on the date on which the Delivery note is signed by the buyer as receipt of goods.
CAclubindia
