Revenue Recognition & Valuation
Criteria for Recognition and Valuation
The fair value of the consideration we receive is usually the price of the good related to the operation, less discounts or rebates, whatever their nature, and incorporated in the nominal interest loans maturing within a year.
Interests may be included in commercial loans with a maturity not exceeding one year when there is a contractual interest rate and the effect of not discounting the cash flows is not significant.
Also consider: taxes on these transactions are not included in the amount.
Expenditures, including transport by the company, are accounted for in Group 6 accounts.
Discounts based on reaching a certain order volume are recorded as rebates in account 709.
Discounts for prompt payment are recorded in account 706.
Discounts after receipt of invoice.
Containers loaded invoice as return on the account 437. If there is no refund, use account 704.
NRV Conditions for Sales and Services Recognition
Sales Revenue:
The NRV specifies the conditions to be met by income from sales and services for accounting recognition:
- The company transferred to the buyer the significant risks and rewards incidental to ownership of property.
- The amount of revenue can be measured reliably.
Revenue from Services:
Revenue from the rendering of services will be recognized when the outcome of the transaction can be estimated reliably, considering the percentage of completion of service at the time of year-end.
When the revenue from the provision of services could not be reliably established, revenue will be posted for the recoverable value of the expenses we have incurred.
Clients and Accounts Receivable
Valuation of Accounts Receivable
Initial Assessment
Accounts receivable are initially measured at fair value.
Subsequent Measurement
Subsequent measurement depends on the type of valuation taken:
- Amortized cost.
- Nominal value.
Valuation of Accounts Payable
Initial Assessment
- Accounts payable are initially measured at fair value, which is the price of the transaction.
- Debits for business operations with a maturity less than one year may be valued at their face value.
Subsequent Measurement
Subsequent measurement depends on the type of initial assessment:
- Amortized cost
- Nominal value for which this value taken as reference.
Purchases and Other Expenses
NRV #10 determines:
- Additional costs (transport, customs, insurance) increase the value of acquisitions.
- Non-recoverable indirect taxes are also included.
- Discounts and the like, including invoices, will decrease the amount of purchases.
- Discounts based on reaching a certain purchase volume are recorded as rebates in account 609.
- Deductions made by suppliers for prompt payment are accounted for as purchase discounts for prompt payment in account 606.
- Discounts for breach shall be credited to account 608.
- Containers loaded with quality bill return are recognized in packaging 406 to be returned to suppliers.
If no return is posted to account 602 purchase of other supplies.