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
Sell of Assets
Answers
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)
Filed Under:
Accounting