Goods in transit
Determine which entity controls the goods and whether they meet its inventory recognition requirements by examining the contract and delivery terms. Physical arrival is not automatically the recognition date. The seller and buyer must assess when control transfers and avoid omitting goods from both sets of records or recognising them twice. For intragroup shipments, eliminate intragroup effects in consolidated statements as required.
Worked example
A supplier ships goods on 29 December and the contract transfers control to the buyer on shipment. The goods arrive on 3 January. Subject to the facts and applicable requirements, the buyer includes them in inventory at 31 December even though they are still in transit.
Common mistake
Assuming goods are never inventory until they physically arrive, regardless of the contractual control-transfer terms.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |