CIF Revenue Recognition Timing Questions What is the timing of revenue recognition under CIF and FOB

In order to make it visualized and operable, the bill of lading should be obtained as the time point for revenue recognition, and the bill of lading, customs declaration and bill of lading should be used as the basis for revenue recognition.

The revenue recognition point of general commodity export sales is not much different from domestic sales in essence, except that the transportation distance is longer and the transportation risk is greater. According to the five conditions for recognition of the revenue from the sale of goods in the revenue standard, regardless of export or domestic sales, regardless of the mode of transaction or transportation, the buyer shall receive and sign for the receipt.

CIF stands for: Cost (FOB) + Insurance + Sea Freight.

FOB stands for: Cost (FOB).

The point in time when revenue is recognized under CIF and FOB** conditions is.

It costs more to do CIF than FOB for insurance and sea freight.

Subtracting these two fees is the same cost as FOB**.

According to the 2000 and 2010 international ** terminology, both the CIF term and the FOB term are for transfer on board the ship. Therefore, revenue should be recognized when the goods are loaded at the port of shipment, not the port of destination. Using D-type terms such as DAP or DAT, DDP terms are the place where the risk is transferred is at the destination, and the revenue is recognized at the destination of arrival.

The only difference between CIF and F0B is that the CIF seller has to take care of the shipping and insurance and pay for it, while FOB does not. Therefore, the time of recognition of CIF export revenue is not the time when the goods arrive at the port of destination, but the time when they arrive at the port of shipment.

CIF stands for: FOB + Insurance + Sea Freight.

The enterprise shall determine the amount of revenue from the sale of goods in accordance with the contract or agreement price received or receivable from the purchaser, unless the contract or agreement price received or receivable is unfair.

The principles and basis of revenue recognition in accounting are inconsistent with those recognized in the tax law, so financial statements and tax returns may appear not only in the export process, but also in the daily declaration of VAT and other taxes.

The inconsistencies in the figures, and the principle of dealing with them in practice is also to adjust the table and not adjust the accounts. In the export sales, it is the L/C price, and the order clarifies the export payment, freight, and insurance. The freight is from the port of shipment to the destination port of foreign countries, customs declaration.

The invoice amount is the L/C price, that is, the full payment, freight and insurance. Letter of credit refers to a written voucher issued by the bank to the exporter at the request of the importer to guarantee the responsibility of paying the purchase price. In the L/C, the bank authorizes the exporter to issue a bill of exchange not exceeding the prescribed amount under the conditions specified in the L/C, with the bank or the bank designated by the bank as the payer, and to attach the shipping documents as required, and to collect the goods at the designated place on time.

In international** events, buyers and sellers may distrust each other, and buyers worry about prepayment.

After that, the seller does not deliver the goods as required by the contract; The seller was also concerned that the buyer would not pay after the shipment or the submission of shipping documents. Therefore, it is necessary for two banks to act as guarantors for both the buyer and the seller, to collect and submit documents on behalf of the buyer, and to replace commercial credit with bank credit. The tool used by the bank in this activity is the letter of credit, which is a certificate that the bank conditionally guarantees the payment, and has become a common settlement method in international activities.

According to the general provisions of this settlement method, the buyer first deposits the payment with the bank, and the bank opens a letter of credit, and the seller's bank informs the seller that the seller will open an account and inform the seller, and the seller will deliver the goods according to the terms stipulated in the contract and the letter of credit, and the bank will pay on behalf of the buyer.

Letters of credit can be divided into documentary credits.

Letters of credit, irrevocable letters of credit, revocable letters of credit, confirmed letters of credit, non-confirmed letters of credit, and letters of credit at sight.

We have a usance letter of credit, an extended letter of credit, a transferable letter of credit, a non-negotiable letter of credit.

1. In terms of accounting, I personally think that the revenue, freight and insurance should be recognized as sales expenses at the full CIF price. This is similar to domestic sales, where the seller bears the freight and the seller counts the freight into the sales expense.

In export sales, it is the CIF price, and the order clarifies the export payment, freight, and insurance. The freight is from the port of shipment to the destination port abroad, and the amount of the customs declaration form and invoice is CIF price, that is, all the payment, freight and insurance. Among them, the invoice lists the details, and the export tax rebate must be calculated at the FOB price, that is, it does not include freight and insurance.

Another advantage is that the amount will be the same as the customs declaration, and it will be easy to respond to the total amount of exports confirmed to the customs.

Second, the principle and basis of accounting recognition of income and tax law recognition of income are inconsistent, so not only in the export link, but also in the daily declaration of value-added tax and other taxes, there may be inconsistencies between the financial statements and the tax return figures, and the treatment principle in our practice is also to adjust the statement (declaration form) and not adjust the account (financial account). You can refer to the notice of the State Administration of Taxation on the issuance of the "Operating Rules for the Administration of Tax Exemption, Credit and Refund of Export Goods of Production Enterprises" (for trial implementation) (Guo Shui Fa [2002] No. 11) II. Calculation of "Exemption, Credit and Refund" Tax of Production Enterprises (1) The "exemption, credit and tax refund" of export goods of production enterprises shall be calculated according to the FOB price of export goods and the tax rebate rate of export goods. The FOB price of export goods (FOB) shall be subject to the FOB price on the export invoice (if the export is entrusted, the export invoice can be issued by the entrusting party or issued by the entrusted party), and if the transaction is made under other conditions, the freight, insurance premium, commission, etc. allowed to be offset by the export sales revenue shall be deducted according to the provisions of the accounting system.

If there is a difference between the declared amount and the actual payment amount, it will be adjusted at the time of the next tax refund declaration (or adjusted together with the year-end liquidation). If the export invoice cannot truthfully reflect the FOB price, the enterprise shall declare the "exemption, credit and refund" tax according to the actual FOB price, and the tax authorities have the right to verify it in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection and Collection, the Provisional Regulations of the People's Republic of China on Value Added Tax, etc.