Recently, in the process of accounting, auditing and tax declaration of a Hong Kong company, one of our customers communicated that the company provides sales and follow-up maintenance of mechanical and electrical products, and the contract terms involve goods and services. How can we confirm the income in this situation?
Recently, I worked in Hong Kong company to make accounts.Hong Kong corporate auditIn the tax declaration of the Hong Kong company, one of our customers communicated that the company provides mechanical and electrical products sales and follow-up maintenance business, and the contract terms involve goods and services. How can we confirm the income in this situation?
The principle of revenue recognition is that the enterprise should recognize revenue when it has fulfilled the performance obligations in the contract, that is, when the customer obtains the control right of the relevant commodity. To gain control of a commodity is to be able to dominate the use of the commodity and gain almost all economic benefits from it. According to the revenue recognition criteria, the revenue recognition model consists of five parts: contract identification; Identify individual performance obligations; Determining the transaction price; Allocation of transaction prices; Recognize revenue.
The customer stated that the contract provided for two years of maintenance service for the products sold. First identify two performance obligations: selling products and providing maintenance services, if the total contract amount is200Ten thousand Hong Kong dollars, the price of the product is150Ten thousand Hong Kong dollars, maintenance service is50Hk $10,000, then the commodity control transfer to the other party should be recognized revenue150Hk $10,000 rather than200Ten thousand Hong Kong dollars,50Hk $10,000 is recognized as a contractual liability and the Service will recognize service revenue at a certain point or period in the following two years according to the criteria.
Therefore, the correct confirmation of income is the accounting of Hong Kong company.Hong Kong corporate auditVery important part.
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