revenue recognition

revenue recognition

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Hi Guys & Gals,

I have a query on how I should recognise a sales invoice I have recently created.

The sales invoice relates to a claim for compensation for losses. Realistically it is very unlikely that we will receive the money, however we wanted to raise and send them an invoice anyway.

When processing the invoice in the accounts should I show this as sales, so CR Sales / DR Accounts Receivable?

Currently my understanding of revenue recognition is that revenue should only be recognised if it is probable that economic benefits will flow to the entity, and that the amount can be reliably measured. 

On this basis it isn't revenue, but where should I book the sales invoice?

Any help would be much appreciated,

Many Thanks

AccountingQueries2015

Replies (1)

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By johngroganjga
02nd Apr 2015 15:23

It would help to know how far off your year end is, but in any event the best person to discuss this with is the accountant who will be preparing your next annual accounts.

But why are you raising an invoice for this at all? It seems most odd. Has someone advised you to do so?

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