Hello, I was wondering if I can seek some guidance from more experienced accountant here. So We have calculated that our revenue for Sept is around 500k. However, on 10/14, a customer disputed all of their invoices through their bank (credit card issuer) - around 45k. Our company responded with signed contracts and evidence to their bank and it's currently in review by the bank. Is this case, for Sept revenue, do we still include 45k for the revenue? MY take is that we still recognize the disputes for the revenue until it's finalized. if we lose the disputes then we come back to Sept when we perform qtrly close or yearly close. Thank you for any guidance.
Revenue Recognition on Customer invoice disputes
Is this just a general bookkeeping question or are you preparing financial statements in accordance with GAAP?
If you are talking about bookkeeping, it depends on whether or not the cash hit the bank or not and if you guys report on the cash or accrual basis. With accrual yes you would recognize the revenue if the performance obligation has been performed. With cash basis of accounting you would only recognize the revenue if you have the funds in your bank account.
If you are doing it in accordance with GAAP it sounds as though you may have a contingent liability on your hand and as such may have to book a contingent liability if it is "Probable and estimable."
If you have any more questions feel free to private message me.