Accounting · Accounting Principles
Regarding specialized security software licenses worth ₹3,50,00,000 sent to a client on a 'Sale or Return' basis, which treatment is correct under the Realisation Concept for the balance sheet as of March 31, 2025, if the approval period has not expired?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It should be recorded as a short-term loan to the client until they decide to buy the software.
- 2It should be recorded as a sale but with a 50 percent provision for return to be conservative.
- 3It should not be recorded as a sale; the licenses should be included in the closing stock at cost or net realizable value, whichever is lower.✓
- 4It should be recorded as a final sale since the licenses have already been delivered.
Correct answer
It should not be recorded as a sale; the licenses should be included in the closing stock at cost or net realizable value, whichever is lower.
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