I am expecting the answer in line with IFRS.
We are a trading company. We import goods from outside the country and export to another countries. The basic issue is for the carriage cost incurred at the time of sales.
1. Assume that there is a customer 'X' to whom we have to export the goods.
2. The invoice total is USD 100 and break up are like this :( Goods Value = 80 + Carriage/Transport =15 + Insurance=5)
3. Now, the Company has not its own transportation facilities and even insurance facilities need to be outsourced.
4. In doing so, the company pays USD 8 as transportation fees USD 2 as insurance fees.
5. The cost of the product is USD 60 (assumed)
Now the query is :
a) Shall we take USD 15 and USD 5 as direct revenue
b) Shall we take USD 8 and USD 2 as direct cost
c) Can we take the net amount as other Income (here, 15+5-8-2=10)
If we take USD 15 and USD 5 as direct revenue and ignore USD 8 and USD 2 while computing the Gross Profit, the Gross Profit will be inflated, which I believe is not correct.
Thanks in advance. I would be really happy to get the references link from the IFRS Standards.
In nut sell, the query is : whether the carriage cost charged to the customer and carriage cost separately paid to the shipping agent form part of direct revenue and direct cost or not for the purpose of computing gross profits under IFRS.