A new client runs a long established bridal shop.
Dresses are sold on a 2.5x Markup for example dress sold for £2.5k would have cost £1k (for the purpose of my question let's ignore VAT)
When a customer orders the dress they pay 50% - non refundable, and the shop orders and pays up front for the dress. If the customer changes their mind they are not entitled to a refund. The dress still arrives and is the property of the bride to be. If they do change their mind, the shop do offer to hold it and resell on their behalf.
The remaining 50% is payable 4 weeks before the wedding or when fitting and alterations commence. (date dependant)
Previous advisor has been recognising no income - by deferring first 50% of income - until final delivery/fitting/acceptance and on the flip side prepaying the purchase cost.
As the first 50% is non refundable, and the dress belongs to the bride to be, I see no problem in recognising the first 50% at the outset - so in my example they would have a sale of £1.25k (50%), cost of £1k and profit of £250 before the year end (30 June), the remaining £1.25k of income being earned post YE for fitting and tailoring services.
I have also considered the overall performance of the contract insofar as the initial sale may actually involve more work than subsequent alterations so one could argue that you should recognise more than just the 50% up front - but this I doubt.
I am open to other advice/experience in this area as Wedding Dresses (or perhaps some of you act for high end tailors/outfitters where this arises) are not my usual speciality.