very informative sir! thank you for providing us with your time and effort to help our future CPA's, one question though sir, isn't it correct that installment sales is an example of a conditional sale wherein the seller retains ownership of the property unless and until the buyer fully pays the price? and at the same time we should recognize the substance of the economic transaction of the sale and the effect is the ownership is transferred to the buyer. my question proper is if there is a reconciliation between these two foregoing scenarios. or will the substance over form always prevail thank you sir and God bless. pa shout out po sa mga future CPA's sir ng JRU lol
Good shipped subject to condition/conditional sale and installement sales are two different things. In the conditional sale it is either installation and inspection conditions and on approval when the buyer has negotiated a limited right of return. The point is lagi mong tatanungin, nakino na naba ang control ng inventory? halimbawa na kay buyer na kahit na installment binbyaran. Kapag sinabing nakanino ang control meaning kahit ano pwede nyang gawin (paupahan, ibenta, idonate), so kung meron na syang gnyang karaptan then the buyer has ownership. Ang liability na lang ni buyer kay seller ay magbayad.
Also, under installment sales agreement (which is the exception sa legal test), revenue is recognized at the date of sale. Therefore, by the mere fact na narecognize ka na ng revenue inaccknowledge mo na may transfer na ng risk and rewards ng binbenta mo (kahit hindi pa sya fully paid). Tingnan mo ung mga nakahome credit na appliances, installment ang bayaran pero sayo na nakapangalan yung kapag nagdown kana. Wala ng pake si seller kung masira yun or manakaw bsta natrasnfer na nila sayo ang onwership kaya need mo magbayad. Imagine kung nakay seller pa ang ownership nun sya ang magbbear ng risk and rewards, halimbawa nanakaw (tulad gn cellphone for example) so ibig sbhin pa pala dapat wala ng liability si buyer na magbayad kc si seller naman magbbear ng risk eh. get the point? yown!
Yung sinsabi kasing nasususnod ang substance over form kesa sa legal form ay dahil minsan dahil nga may mga loopholes ang batas, pinaplabas na yung form itsel ang nagrerepresent kung paano sya ittreat pero kapag binasa mo yugn laman nung form iba naman ang intention. halimbawa, contract of sale, nagbebenta si company sa isang employee ng company vehicle. So kugn titinagnan mo sale yun dba. Pero kapag binasa mo laman, ibnenbenta ng P1 peso lang. Maliwanag na hindi ito sale kundi donation pero by legal form nakalagay sales. Yan yugn sinsabing isang example.
@@deancjformaranaccountinglec yes po noted po the analogy being consistent with matching principle of recognizing Cost of goods sold together with sales po. thank you for enlightening me sir
very informative sir! thank you for providing us with your time and effort to help our future CPA's, one question though sir, isn't it correct that installment sales is an example of a conditional sale wherein the seller retains ownership of the property unless and until the buyer fully pays the price? and at the same time we should recognize the substance of the economic transaction of the sale and the effect is the ownership is transferred to the buyer. my question proper is if there is a reconciliation between these two foregoing scenarios. or will the substance over form always prevail thank you sir and God bless. pa shout out po sa mga future CPA's sir ng JRU lol
Good shipped subject to condition/conditional sale and installement sales are two different things. In the conditional sale it is either installation and inspection conditions and on approval when the buyer has negotiated a limited right of return.
The point is lagi mong tatanungin, nakino na naba ang control ng inventory? halimbawa na kay buyer na kahit na installment binbyaran. Kapag sinabing nakanino ang control meaning kahit ano pwede nyang gawin (paupahan, ibenta, idonate), so kung meron na syang gnyang karaptan then the buyer has ownership. Ang liability na lang ni buyer kay seller ay magbayad.
Also, under installment sales agreement (which is the exception sa legal test), revenue is recognized at the date of sale. Therefore, by the mere fact na narecognize ka na ng revenue inaccknowledge mo na may transfer na ng risk and rewards ng binbenta mo (kahit hindi pa sya fully paid).
Tingnan mo ung mga nakahome credit na appliances, installment ang bayaran pero sayo na nakapangalan yung kapag nagdown kana. Wala ng pake si seller kung masira yun or manakaw bsta natrasnfer na nila sayo ang onwership kaya need mo magbayad. Imagine kung nakay seller pa ang ownership nun sya ang magbbear ng risk and rewards, halimbawa nanakaw (tulad gn cellphone for example) so ibig sbhin pa pala dapat wala ng liability si buyer na magbayad kc si seller naman magbbear ng risk eh. get the point? yown!
Yung sinsabi kasing nasususnod ang substance over form kesa sa legal form ay dahil minsan dahil nga may mga loopholes ang batas, pinaplabas na yung form itsel ang nagrerepresent kung paano sya ittreat pero kapag binasa mo yugn laman nung form iba naman ang intention.
halimbawa, contract of sale, nagbebenta si company sa isang employee ng company vehicle. So kugn titinagnan mo sale yun dba. Pero kapag binasa mo laman, ibnenbenta ng P1 peso lang. Maliwanag na hindi ito sale kundi donation pero by legal form nakalagay sales. Yan yugn sinsabing isang example.
@@deancjformaranaccountinglec Yes sir noted po control is the determining factor. thanks po for immediate response very timely po sa discussion namin
@@deancjformaranaccountinglec yes po noted po the analogy being consistent with matching principle of recognizing Cost of goods sold together with sales po. thank you for enlightening me sir
Hi po sir, May part 2 na po ba ng Inventory Discussion?