Hi Everyone,
I am having trouble figuring out how an entry should be accounted and what the appropriate accounts would be for in a similar situation as the following:
Company A has completed services for Company B, let's say the services are worth $500.00.
In exchange for the services, Company B agrees to sell Company A materials at a cost minus what the services are worth, (the cost will be higher than the services) on the condition a sale of a product that needs the materials is made.
The probability of a sale happening is quite high, however, if it is not made then they will not be paid for the services that were completed.
I would also like to know how the loss would be recorded if the sale would become unlikely.
I appreciate your help!
--Amber
I am having trouble figuring out how an entry should be accounted and what the appropriate accounts would be for in a similar situation as the following:
Company A has completed services for Company B, let's say the services are worth $500.00.
In exchange for the services, Company B agrees to sell Company A materials at a cost minus what the services are worth, (the cost will be higher than the services) on the condition a sale of a product that needs the materials is made.
The probability of a sale happening is quite high, however, if it is not made then they will not be paid for the services that were completed.
I would also like to know how the loss would be recorded if the sale would become unlikely.
I appreciate your help!
--Amber