Would love to bounce this off of someone... I'm trying to figure out the best way to account for a transaction that has me scratching my head a bit. We had a customer that we were providing fulfillment services to last year. For simplicity, last year, we charged them $100 for warehouse/fulfillment services for computer hardware. We recognized the revenue in December. The customer went bankrupt in February, and we initiated a lien against the inventory we still held, valued at $300. We've just gotten the green light that we can liquidate the inventory and keep the proceeds to pay for the outstanding debt of $100. My initial thoughts were to write off the entire $100 in the previous year and recognize the proceeds of any liquidation sale to be a gain. But since we have better information now and we can reasonably expect to recoup most if not all the money from the liquidation, can we not leave the $100 receivable as is in the previous year, and apply the proceeds of the liquidation sale to the receivables in the current year? Any excess in liquidation sales over the receivables totals would be recorded as a gain of course. The actual dollars are material, i just used small dollar amounts as an example. Thanks
