UK Business case help - recognising revenue paid over 24 months

[StarfruitCandi]

hi im stuck on a business case I’m doing at work (retail business). So it’s selling a product that costs us £100 and customers will pay £10 a month for over 24 months - I’ve got to business case the numbers for first 6 months, then a full year after.

So, volumes are expected to be 1000 sales a month. I’m planning to show numbers as:

Year 1 (6 months): 6000 (1000 volume x 6 months) x £240 (recognising all therevenue £10 x 24 months up front)
Less costs £100 x 6000 volume
Less bad debt assumption of 10% on the revenue
Less staff commission of 10% on the revenue

Year 2 same again but on volumes of 12000 sales

Anything I’m missing here? Am I ok recognising the revenue all up front??

Thanks

Candi

 

[Fidget]

Assuming that the product becomes the buyer's at the point of sale, then yes, it's correct to recognise the sale at that time, regardless of when the buyer pays for it.

 

[kirby]

Careful here, Candi. Unless problem says you can recognize all the income upfront then the usual assumption is that you cannot do so. See if the case says what the product is