With fdiinvietnam.com, learn about unrealized revenue – How to account for unrealized revenue, account 3387 (account 3387), for example account 3387.
I. Unrealized revenue – What is account 3387?
Unrealized revenue is an account that reflects the current revenue and the increase or decrease in unrealized revenue during the accounting period of the enterprise, including:
- The amount the customer has paid in advance for one or more accounting periods for the lease of an asset;
- Advance payment of interest received when lending capital or purchasing debt instruments;
- Other unrealized revenues such as: the difference between the installment or deferred payment price as committed and the cash price, the revenue corresponding to the value of goods and services or the amount of discounts arising from the program for traditional customers.
Do not record the following items in account 3387:
- Money collected in advance from customers for which the business has not yet provided products, goods or services;
- Uncollected revenue from asset leasing and service provision over multiple periods.
II. How to account for unrealized revenue (account 3387)
1. In case of receiving advance payment for many periods for fixed asset leasing and investment real estate leasing, accountants must reflect revenue in accordance with fixed asset and real estate leasing services in each period.
| Revenue by period | = | Amount received in advance in multiple periods |
| Number of previous receipts |
➧ When collecting advance payments from customers for fixed asset operating lease services and investment real estate operating lease services for multiple periods, the accountant records:
Debit accounts 111, 112…: Total amount received in advance;
Credit account 3387: Price excluding VAT;
Credit account 33311: VAT payable.
➧ Periodically, accountants calculate and transfer revenue of the period, accountants record:
Debit account 3387: Unrealized revenue of an accounting period;
Credit account 5113, 5117: Revenue from providing services and trading investment real estate.
➧ If there is a case where the fixed asset operating lease contract and investment real estate operating lease contract cannot be continued or the implementation time is shorter than the time for which the advance payment was collected, the amount that must be returned to the customer (the advance payment minus the remaining amount not yet implemented) is recorded by the accountant:
Debit account 3387: Remaining amount collected in advance;
Debit account 33311: VAT amount of asset leasing activities not returned to customers;
There are accounts 111, 112…: Total amount returned.
- Periodically, accountants calculate and depreciate fixed assets and real estate for operating lease, record:
Debit account 632: Cost of goods sold, detailed rental costs of fixed assets and real estate;
Credit account 2141, 2147: Depreciation of fixed assets, investment real estate.
➧ In the case of selling and leasing back fixed assets under financial leases with a selling price greater than the remaining value of the sold and leased back fixed assets, the accountant records:
Debit accounts 111, 112, 131: Total payment value;
Credit account 711: Calculated based on the remaining value of fixed assets sold and leased back;
Credit account 3387: Difference between selling price and remaining value of fixed assets;
Credit account 33311: VAT payable.
- At the same time, record a decrease in fixed assets:
Debit account 811: Remaining value of fixed assets sold and leased back;
Debit account 214: Depreciation of fixed assets;
Credit account 211: Fixed assets.
- When leasing back assets and paying interest:
Debit account 212: Financial lease debt;
Credit account 3412: Long-term debt;
Debit accounts 623, 627, 641, 642: Expense accounts;
Credit account 2142: Depreciation of fixed assets;
Debit account 635: Financial expenses;
There are accounts 111, 112: Cash, bank deposits.
- Periodically, the accounting transfers the profit difference between the selling price and the remaining value of the fixed assets sold and leased back, reducing the production and business expenses in the period in accordance with the asset lease term:
Debit account 3387: Unrealized revenue of an accounting period;
There are accounts 623, 627, 641, 642…: Expense accounts.
➧ In case the accountant is allowed to record the entire prepaid revenue if the rental period accounts for more than 90% of the remaining useful life of the leased asset and satisfies the following conditions:
- The lessee has no right to cancel the lease contract and in any case the lessor is not obliged to return the amount received in advance;
- The amount received in advance shall not be less than 90% of the total expected rental income during the term of the property lease contract and the lessee shall pay the entire amount within 12 months from the commencement of the property lease;
- Almost all the risks and rewards of ownership of the leased asset have been transferred to the lessee;
- Enterprises must estimate relatively fully the cost of asset leasing activities.
➧ The recognition of all revenue from the amount received in advance from asset leasing activities must be fully explained in the financial statements regarding the difference in revenue and profit compared to the recognition by the method of gradually allocating the lease period. The impact of recording all revenue received in advance on the ability to reduce the ability to generate cash, the risk of reducing revenue and profit of future accounting periods.
2. Accounting for installment and deferred sales
➧ When selling goods on credit or installments, reflecting sales revenue at the cash price excluding tax, the accountant records:
Debit account 111, 112: Cash, bank deposits (if money is collected immediately);
Debit account 131: Amount receivable (if not yet collected);
Credit account 511 (5111, 5113): Cash price excluding tax;
Credit account 333 (3331, 3332): VAT payable;
Credit account 3387: Difference between total amount according to deferred payment and installment payment price compared to immediate payment price.
➧ Periodically, accounting allocates by number of installment and deferred payment periods and records revenue from deferred and installment sales interest during the period:
Debit account 3387: Interest amount for one period of deferred payment or installment payment;
Credit account 515: Interest amount for one period of deferred payment or installment payment.
3. Before Circular 200 takes effect, enterprises are reflecting exchange rate differences in account 3387, the unallocated exchange rate differences of the pre-operation period must be transferred entirely to financial operating revenue in the period to determine business results.
Debit account 3387: Unrealized revenue (exchange rate difference profit);
Credit account 515: Financial activity revenue (exchange rate difference profit).
4. Revenue generated from programs for traditional customers
➤ In the traditional customer program, when selling goods and services, accountants record revenue based on:
| Sales revenue | = | Total amount collected | – | Fair value of goods and services provided free of charge, discount amount for customers |
Debit accounts 112, 131: Collected goods or not yet collected;
Credit account 511: Sales revenue and service provision (5111, 5113);
Credit account 3387: Unrealized revenue (value of goods, services or discount amount for customers according to the program);
Credit account 33311: VAT payable.
➤ If during the program implementation period, customers do not meet the conditions to enjoy incentives such as receiving free goods, services, or sales discounts, the seller does not incur an obligation to pay the customer, the accountant records unrealized revenue as revenue from selling goods and providing services:
Debit account 3387: Unrealized revenue (value of goods, services or discount amount for customers according to the program);
Credit account 511: Sales revenue and service provision (5111, 5113).
➤ When customers meet all program conditions to enjoy program incentives, unrealized revenue is handled as follows:
➧ In case the seller directly provides goods or services for free or at a discount to the buyer, the accountant records the unrealized revenue transferred as sales revenue or service provision revenue at the time of transferring the free or discounted goods or services to the customer.
Debit account 3387: Value of goods, services or discount amount for customers according to the program;
Credit account 511 (5111, 5113): Value of goods, services or discount amount for customers according to the program.
➧ In case the supplier of goods, services or discounts to customers is a third party, the following shall be done:
- In case the enterprise acts as an agent of a third party, when paying the third party, the revenue from sales of services is calculated as the difference between the unrealized revenue and the amount payable to the third party, the accountant records:
Debit account 3387: Value of goods, services or discount amount for customers according to the program;
Account 511: Agent commission is the difference between unrealized revenue and the amount paid to the third party;
There are accounts 111, 112: Amount paid to third parties.
- In case the enterprise does not act as an agent of a third party (buying and selling outright). When paying the third party, all unrealized revenue will be recorded as sales revenue, providing services, and the payment to the third party will be recorded in cost of goods sold, the accountant records:
Debit account 3387: Value of goods, services or discount amount for customers according to the program;
Credit account 511 (5111, 5113): Value of goods, services or discount amount for customers according to the program.
➧ At the same time, record the cost of goods and services provided to customers as the amount payable to a third party, the accountant records:
Debit account 632: Amount paid to third parties;
There are accounts 112, 331: Amount paid to third parties.
III. Some frequently asked questions when accounting for account 3387
1. Distinguish between pre-collection recorded in customer debt and pre-collection recorded in unrealized revenue account?
- The amount collected in advance is recorded in customer debt (Account 131 – Customer receivables) when paying in advance a part of the value of the contract for providing goods and services, according to the agreement of the two parties to ensure the performance of the contract. When the seller has completed the provision of goods and services to the buyer, the buyer pays the remaining value according to the signed contract;
- Advance payments are recorded in unrealized revenue (Account 3387 – Unrealized revenue) when customers have made prepayments for one or more accounting periods for asset leasing, or prepaid interest received when lending capital or purchasing debt instruments, or the difference between the installment or deferred payment price as committed and the cash price, revenue corresponding to the value of goods and services, or the amount of discounts arising from the program for traditional customers.
2. Company A has a transport vehicle with an original cost of VND 1,300,000,000, a depreciation period of 10 years, and accumulated depreciation of VND 260,000,000. On February 1, 2020, Company A leased the vehicle to Company B for VND 22,000,000/month (including VAT), with a contract term of 4 years. On February 2, 2020, upon receiving the vehicle, Company B transferred an advance payment to Company A for 24 months of rental fees of VND 528,000,000. On April 30, 2021, Company B terminated and did not continue the contract. How will Company A record and account for it?
Accountant issues invoices and records as follows:
Debit account 1121: 528,000,000;
Credit account 3387: 480,000,000;
Credit account 33311: 48,000,000.
- Every month, the accountant transfers unrealized revenue to monthly revenue and records cost of goods sold (fixed asset depreciation expenses):
Debit account 3387: 20,000,000;
Credit account 5113: 20,000,000;Debit account 632: 10,833,000;
Credit account 2141: 10,833,000.
- On April 30, 2021, Company B had rented for 15 months, according to the contract term, there were 9 months left to be implemented, the accountant transferred the money to the bank to return and recorded a reduction in unrealized revenue:
Debit account 3387: 180,000,000;
Debit account 33311: 18,000,000;
Credit account 1121: 198,000,000.
3. Company A sells 1 Imac computer set with the cash price excluding tax of 120,000,000 VND/set, the installment price excluding tax is 132,000,000 VND/set, the cost of goods sold is 110,000,000 VND/set. Customer H buys 1 computer set in installments, the customer pays 60% of the goods in advance by bank transfer, the remaining amount will be paid within 6 months. So how will company A account for this?
- When selling goods, accounting records are as follows:
Debit account 112: 87,120,000;
Debit account 131: 58,080,000;
Credit account 5111: 120,000,000;Credit account 3387: 12,000,000;
Credit account 33311: 13,200,000.
- Record cost of goods sold:
Debit account 632: 110,000,000;
Credit account 1561: 110,000,000.
- Monthly revenue recognition from sales profits:
Debit account 3387: 2,000,000;
Credit account 515: 2,000,000.
4. Company A sold a production machine with an original cost of VND 300,000,000, with accumulated depreciation of VND 100,000,000. The selling price excluding VAT to a finance leasing company was VND 240,000,000 and was collected by bank transfer, then leased back for VND 240,000,000, interest rate 10%/year, excluding tax, lease term 3 years. How should Company A account for this?
- When selling machinery, the accountant records:
Debit account 811: 200,000,000;
Debit account 2141: 100,000,000;
Credit account 2111: 300,000,000;
Debit account 1121: 264,000,000;
Credit account 711: 200,000,000;
Credit account 3387: 40,000,000;
Credit account 33311: 24,000,000.
- When leasing machinery, the accountant records:
Debit account 212: 240,000,000;
Debit account 1331: 24,000,000;
Credit account 3412: 264,000,000.
- Monthly interest and principal payments via bank account, accountant records:
Debit account 623: 2,200,000;Debit account 3412: 7,333,333;
Credit account 112: 10,533,333.
- Periodically, accountants record depreciation of fixed assets and transfer the difference between the selling price and the remaining value of the fixed assets in accordance with the asset lease term:
Debit account 623: 6,666,667;
Credit account 2142: 6,666,667;
Debit account 3387: 1,111,111;
Credit account 623: 1,111,111.
5. Company E implements a loyalty program for the company’s customers from November 1, 2021 to November 30, 2021.
| Item name | Cost of goods sold | Price does not include VAT |
| Product B | 800,000 VND/piece | 1,000,000 VND/piece |
| Product C | 2,200,000 VND/piece | 2,500,000 VND/piece |
| Product D | 3,500,000 VND/piece | 4,000,000 VND/piece |
- Customers who buy 100 products B will receive a discount of 2 products B;
- When customers buy 100 products C, they will receive 1 PNJ gold bar. Company E buys PNJ products at 5,000,000 VND/tael;
- When customers buy 100 products D, they will receive a tour in Da Nang worth 11,000,000 VND including VAT from company H. Company E receives a commission of 1,000,000 VND/trip.
How will the accountant account for this?
- On November 2, 2021, customer A bought 50 product B, the accountant recorded:
Debit account 131: 55,000,000;
Credit account 5111: 49,000,000;
Credit account 3387: 1,000,000;
Credit account 33311: 5,000,000;
Debit account 632: 40,000,000;
Credit account 1561: 40,000,000.
- On November 5, 2021, customer A purchased 50 products, the accountant recorded:
Debit account 131: 137,500,000;
Credit account 5111: 122,500,000;
Credit account 3387: 2,500,000;
Credit account 33311: 12,500,000;
Debit account 632: 110,000,000;
Credit account 1561: 110,000,000.
- If before November 30, 2021, customer A does not purchase any more products, the accountant will record:
Debit account 3387: 3,500,000;
Credit account 5111: 3,500,000.
- If from November 6, 2021 to November 30, 2021, customer A continues to buy 50 more products B and 50 products, meeting the conditions of the loyalty program, the accountant records:
Debit account 131: 192,500,000;
Credit account 5111: 171,500,000;
Credit account 3387: 3,500,000;
Credit account 33311: 17,500,000;
Debit account 632: 150,000,000;
Credit account 1561: 150,000,000.
- At the end of the program, if the customer is eligible for the offer:
Debit account 3387: 7,000,000;
Credit account 5211: 2,000,000;
Credit account 5111: 5,000,000.
- Accounting for gift purchases in cost of goods sold, record:
Debit account 632: 5,000,000;
Debit account 1331: 500,000;
There are 1121 (PNJ): 5,500,000.
- Collect money from customers:
Debit account 1121: 378,000,000;Debit account 5211: 7,000,000;
Credit account 131: 385,000,000.
- On November 25, 2021, customer B purchased 100 products D, paid by bank transfer and was eligible for the program’s incentives:
Debit account 1121: 440,000,000;
Credit account 5111: 400,000,000;
Credit account 33311: 40,000,000;
Debit account 632: 350,000,000;
Credit account 1561: 350,000,000.
- When paying for the tour to company H and receiving the agent commission:
Debit account 3387: 11,000,000;
Credit account 5113: 1,000,000;
Credit account 1121: 10,000,000.