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Classifying revenue differently to how it's sold

Classifying revenue differently to how it's sold

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I'm curious as to whether other people have come across a requirement to book / classify revenue differently to how it is sold to customers.

The example I have is where the customer order might be broken down as:

Product Price
Product1 £500
Product2 £1000

And likewise the invoice has the same structure (otherwise the customer will query it).

But for reporting purposes it is considered that both products contribute evenly to the solution, and there are approximately equal costs associated with them, hence the revenue should be booked £750/£750.

Other than the finance system issues of preparing the invoice with one breakdown and booking with another, are there any other considerations for this? Relevant financial reporting standards? Any other good/best practice?

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By Mr_awol
14th Sep 2016 10:23

So the client has discounted one product to subsidise a sale, but wants to reflect the true position in their accounts.

Most commonly seen I suppose via the over-allowance code used by some car dealers, to represent them paying over the odds for a p/x rather than discount a new vehicle - or larger retailers who might discount the main product to induce the customer to take out additional extras like guarantees, etc.

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By TerryD
14th Sep 2016 13:42

Under FRS102 (but not Section 1A) you have to analyse your turnover between the sale of goods and the rendering of services (and about half a dozen less relevant categories). So if Product 1 is a sale of goods and Product 2 is a service, then the correct (whatever that might be) split will need to be disclosed.

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