Ireland Revenue recognition

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Dec 19, 2022
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Hi All,

Hope all is well.

I have a question re revenue recognition. Is it possible to issue a full invoice to customer (as the customer need to claim full VAT) for which he/she has already made a partial payment for but the order will be completed after couple of months.

Can we simply raise an invoice for him/her and transfer it to deferred liability until the order is completed. Once the order is completed, we can transfer it to revenue (P&L)?
 
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Dec 28, 2022
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Afghanistan
Hi All,

Hope all is well.

I have a question re revenue recognition. Is it possible to issue a full invoice to customer (as the customer need to claim full VAT) for which he/she has already made a partial payment for but the order will be completed after couple of months.

Can we simply raise an invoice for him/her and transfer it to deferred liability until the order is completed. Once the order is completed, we can transfer it to revenue (P&L)?
Rvenue should be recognised only when performance obligations are fullfiled, that is you have transferred the good to your customer. You can however, send them an invoice for full amount before transferring the goods. The journals for you would be( he has paid 2000 out if 10000).

Bank debited 2000
Unearned Revenue Credited 2000

On his side
Bank credited 2000
Prepayments debited 2000.

Claiming VAT depends on whether he pays on cash basis or accrual basis. If it was accrual, he could only claim VAT only after goods have been transferred to him and the invoice shows the substance of the transaction and not just a way to claim VAT receivable.


( Behrouz Aftabigilvan)
 

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