Once I gone through a question in which there was an Accrued Interest received added to the gross profit in the Income statement.
My question is that by looking at the assumption of Accruals will it be a fair treatment.
revenue is recognized as Income when ur enforceable right is determined, so for the period upto the Balance sheet date u can accrue as we can see (for verification)that in Bank statement of subsequent period it appears, that means that right is determined on the balance sheet date. In this case it is CORRECT.
If this is not the case, than it is not correct, It also depends the revenue recognition policy of the enterprise.
Muhammad Asif Masood
for islam see,
www.dawateislami.net
asif bhai,
yeh sumajhnay ke liye tu dubara se sab kuch kerna parega..ha ha ha..neways..keep up the good work...
regards,
sirhandi
Majid bhai! aap ko kya sumujhna pare gaa!
u r intellegent enough!!<img src=icon_smile_big.gif border=0 align=middle>
Muhammad Asif Masood
for islam see,
www.dawateislami.net
Dear Asif Bhai
You might be right but if we look at the concept of prudence than will it be applicable.In my view it will not be applicable in any case until revenue is actually recognised.
khawar sab under IAS-18 revenue should b recognized at he fair value
of the consideration RECIEVED OR RECIEVABLE...ofcourse subjected to
certain assumptions...if fair value is less than nominal value the
diference is recognized as interest revenue...so i think its enough
to racognize...
regards,
sirhandi
As far as interest income is concerned, in my view, the accrual principle may be relaxed. the reason interest income is quiet sure type of revenue with rates and terms set in advance between lender and receiver. Accounting policies of the organiation is the major role player in this issue.