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raghu has left a new comment on your post " Accounting Policies... A Sales scenario...":

Financial accounting is compacted into three vital concepts 1.Capital 2.Revenue 3.Deferred.
In this situation on alternative I.
Whisky probably is in work in process stage where inorder generate cash the Producer sells to a bank with a buy back option.The question is whether the physical custody is transfered to the bank/the process of maturing continues in the distiller place.In esssence it could be a loan against Work-in-progress.
If the process of maturing is independent or natural of a factory process then the physical whisky could have changed hands.Then it is simple transfering of risk of maturing and hence a sale at discount which will then be purchased at a predetermined price.
In the former case it could be a simple stock in trade and in the latter it could be a sale accounted at discount like a second sale.GAAP?
2.Lot depends on lease terms but if the sale is outright then one becomes a tenent and the ground a sale of capital asset.But if the lease terms take care for a discounting factor of prospective lease then it could be right of ownership transfer with restriction in usage by the new owner for a specified period which means the asset will appear as a lease hold in the books of the seller and money received would be shown as deferred revenue.adjustible against lease rent in future.
3.Discounted sale realisation.

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Posted by raghu to Management Accountant at 03 June 2007 05:09:00 GMT

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