We have a similar requirement insisted by our Auditors pertaining to sale of
machines/goods under CIF basis. They are insisting us to recognise our
export sale transaction which is in CIF basis, to recognise the sale in
books upon receipt of the goods by the customer which say takes about 30 to
40 days from the date of shipment.
Ticklish question here is cut off period, i.e. transaction happening during
last fortnight of the financial year.
Can somebody suggest best process to handle this type of requirement.
Raghavendra Badkilaya
GM-Finance - Ace Designers Ltd.
| | | ---------------Original Message---------------
From: Roy Brookes
Sent: Tuesday, July 26, 2011 12:20 PM
Subject: FOB Destination - Accounting treatment
I have come across a requirement to post a goods receipt for stock in transit when title passes at the time of loading onto a ship (FOB) under the contract. Title passes when you are responsible for the insurance or, in this case, freight and insurance. In other words when the vendor has delivered to the ship and the goods have been loaded he has fulfilled his side of the contract and from that moment the goods are our risk even though they are not available to us because they are on the high seas and will be for some weeks.
What we did was to create a virtual plant called goods in transit and to do the GR into that plant. Then, when the goods arrived and were available to sell, we did a stock transfer order (STO) from plant to plant. This effectively solved the problem for us that time.
Regards, Roy
Mark as helpful.
Roy Brookes FFA, FInstBA,
SAP? Financials Expert
Senior SAP? Financials Consultant
Published Author
Tel: +49 171 268 9635 (mobile)
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