more-arw search

Q&A Forum

Sell of Assets

Company have sold some assets; however, the actual cash will only be received after the books are closed for the year.
Is there a way to account for it in 2018? specially that the gain of the sale is material , can this be accrued ? there is sufficient documentation to prove that this sale will take place

Answers

CA Najmul Hoda
Title: Chartered Accountant
Company: Desai Haribhakti and co
(Chartered Accountant, Desai Haribhakti and co) |

Basic Principle for recognition of revenue on sale of goods in case accrual basis of accounting is followed: 1. Risk and reward related to goods has been transferred is transferred to the buyer and 2. Certainty for collection of consideration for sale exist.

So, in your case if you have dispatched the goods to buyer then 1st condition will be fulfilled and if you are certain that amount will be realised from buyer, then you can definitely book the profit. All you need to do is pass the following entry

Debtors A/c ....dr (sale Amount)
To assets A/c .... Cr. ( Value of the asset as per books of account)
To profit on sale of Assets( p&l)..... Cr.( amount of profit)

86 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.