A company provides $10000 as deposit for purchasing a equipment from B company.

Question

A company provides $10000 as deposit for purchasing a equipment from B company. A is promised to pay the rest $50000 within one year. If A fails to complete this purchase, B will consider selling this equipment to others ( deposit is nonrefundable) . How to record this transaction according to ASB? Is it relating to real estate sales?(360-20) Please explain it specifically A company provides $10000 as deposit for purchasing a equipment from B company. A is promised to pay the rest $50000 within one year. If A fails to complete this purchase, B will consider selling this equipment to others ( deposit is nonrefundable) . How to record this transaction according to ASB? Is it relating to real estate sales?(360-20) Please explain it specifically How to record this transaction according to ASB? Is it relating to real estate sales?(360-20) Please explain it specifically

Explanation / Answer

If at time of signing, the contract says non-refundable, then at a minimum charge unearned revenue (for that portion that is non-refundable), the other would be customer deposit.

Move it to revenue once the deadline of the deal has past or the customer has exercised the cancellation aspect of the contract.

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