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Aug 18, 2017 at 02:52 PM

Inco term based Revenue recognition in India


Dear experts

I have following requirement from Indian client having factory in Gujarat and depot in North India. They also export goods to subsidiary and end customer in U.S.

As per accounting standard client wants revenue to be recognized when risk is transferred to customer. e.g. if inco term is CIF, DDU, DDP etc "Sales revenue" should be posted in GL when expected delivery date ( EDD ) is reached. Currently it is recognized when VF01 is done. At month end, Client has to manually offset such sales whose EDD is in next month. They do not want to do this manual task.

Accounting entry required are -


Dr Stock in transit 85

Cr Inventory 85


Dr Customer 118

Cr Sales clearing 100

Cr GST Payable 18

When Expected delivery date is reached

Dr COGS 85

Cr Stock in transit 85

Dr Sales clearing 100

Cr Sales revenue 100

We tried using "Proof of delivery" & VLPOD but it does not meet entire requirement.

How can Inco term based revenue recognition be done in SAP and above requirement be met ? What is best practice followed by other clients ?? Please share your thoughts.