How should I record the value of an asset, net of a customer’s partial payment?
Asked on Sept. 19, 2022
Our customer is paying partially for an asset we will own. Should I record the value of the asset net of his participation?
If not, is this participation considered revenue or other income?
• September 19, 2022
Your question lacks some specificity, but I’ll try to answer. As I understand it, you are both paying for an asset which, by definition, will be used to create revenue. Thus, you are effectively creating a joint venture.
Smart money would create a separate entity. PWC created an accounting guide which discusses this concept both under US GAAP and IFRS.
Then, use the asset to create revenue and treat the entity on your books based on the percentage of ownership/control that you exercise with the new entity.
Want to join the conversation? Submit an answer or ask a question by emailing us at [email protected]