Client has received a substantial sum from the people who did his website, which included a copyright image. This money was then paid to the lawyers representing the copyright owners. How should I treat it?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
I recall an old term 'extraordinary gain'......going back a long long time now with that one and have no idea where this would sit with GAAP and IFRS. Would need to do some digging. I'm assuming it's a substantial sum compared to their normal income stream?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I don't see this as a gain, surely this is entered as a liability as, as soon as received it is owed to a third party.
Would the entries not be
Dr Bank
Cr Liability account
Then reverse that when paid to the copyright owners.
I certainly don't see it as either income or a gain, and the reality is somewhat closer to a loan arrangement.
Only interest gained whilst the sum is in the clients bank account would go anywhere near the P&L.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
No worries, I do that all the time Joanne, it's a side effect of us both being so busy yet still trying to our best to help people who ask questions on the site.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Lol John. Yes, Joanne and myself do think of the numbers at a completely different level to most.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
