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Hi
I got problem on revenue recognition question relates to unbundling.
-what is unblinding? Is it like unwinding, dealing with time value of money?Q: furniture sells for £1000 at the beginning of the year, paid off by two instalment of £500 at end of year1 and2. Interest rate 16%.
Answer:
Opening int paid Closing
Y1, 803 128 (500) 431
Y2, 431 69 (500) 0-When initially recognise the sale, which figure will appear in I/S
803? 931? 1000?-And for the interest of 128 and 69, they will be take into I/S as interest income or expense? What is the double entry?
-Is above treatments similarly to unwinding?
Wait for your reply, thanks.
Yes, it’s discounting to get the present value of the $1,000 receivable in two instalments.
Dr Accounts Receivable, Credit Revenue with 803. Year 1
Dr Accounts Receivable, Credit Finance Income with 128 Year 1
Dr Cash Credit Accounts Receivable with 500
Dr Accounts Receivable, Credit Finance Income with 69 Year 2
Dr Cash, Credit Accounts Receivable with 500
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