Income recognition - pro rata basis
Atharv Sankliya (1323 Points)
09 February 2023
what is the meaning of - income is recognised on pro rata basis over the period of subscripttion?
Atharv Sankliya (1323 Points)
09 February 2023
Yasaswi Gomes new
(Finance )
(4492 Points)
Replied 09 February 2023
Yes let me give you and example of customer receiving a discount voucher if you enter into option contract.
Product soap sold at hundred inr
Discount voucher given 20 inr
Total one twenty is the cost to company
We have to allocate this on a prorate basis
Product soap sold at (hundred/one twenty into hundred) = eighty three
Discount voucher actually costed (twenty by one twenty into hundred) = 16.66
Total cost of soap is 83+16.33= 100.
That's pro rata!
If the company wishes, this discount can be unwinded on other products.
sabyasachi mukherjee
(27107 Points)
Replied 10 February 2023
Yasaswi Gomes new
(Finance )
(4492 Points)
Replied 10 February 2023
I gave you an example right? That's only calculation anyone has.
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