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when we entered into transaction which involves sale of good and services.e.g a cell phone is sale at 31st march,2013 for $200. the amount will be paid on installment $100 at 31st march 2014 and $100 at 31st march 2015.
required: how this transaction should be dealt and what impact it will on B/S.At what stage / date did you realise the revenue? Is it on delivery of the phone? Are you providing some sort of follow-up service that is part of the revenue earning activities?
There’s a good article in http://www.iasplus concerning these points and the up-to-date views on IAS 18
Check it out and, if you still have issues, post again
OF what I know:
Recording: When the risk and rewards are transferred along with other conditions which are met in the above questionAffect on B/S: on the basis of accrual revenue would be recorded as it has been recieved however cashflow statement will show the real picture.
@mikeLittle thanks for valuable suggestion,
Get it at IAS plus.If the inflow of cash or cash equivalents is deferred, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting is appropriate. This would occur, for instance, if the seller is providing interest-free credit to the buyer or is charging a below-market rate of interest. Interest must be imputed based on market rates. [IAS 18.11]
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