Re: [sap-acct] FOB Destination - Accounting treatment

Posted by Roy B (SAP Financials Expert)
on Jul 26 at 12:45 PM
I am sorry but you are caught by the terms of sale. CIF means Carriage Insurance and Freight which means that you are responsible for the goods until they are delivered to their final destination - the customer - and title does not pass until then. You have no legal alternative but to keep them on your books as your stock until that moment. What you can do is something similar to what I already described - move the goods to a virtual stock location called goods in transit and do the goods issue from there when they arrive at the customer, so that is your delivery which generates your invoice and you have both sales and cost of sales recognized at the same point in time. This should satisfy the auditors and keeps your books straight.

Rgds, Roy

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Roy Brookes FFA, FInstBA,
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---------------Original Message---------------
From: Raghavendra badkilaya
Sent: Tuesday, July 26, 2011 12:35 PM
Subject: FOB Destination - Accounting treatment

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.

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