USA Freight recognition timing (international)

[Rangerhopps]

Could freight costs be considered a prepaid if the freight activity is in process/completed, and the revenue/invoicing won't occur until it is received in the other country. Matching principle?

Example: Shipment of goods occur and is held in unbilled shipments. transportation time = 3 months. Invoice is not sent and revenue not recognized until product lands at port. Freight invoice is received prior to shipment arrives in country.

Are the freight costs directly expensed or could it be treated as a pre-paid until the goods are invoiced, after the shipment is complete?

 

[kirby]

If the freight activity is completed, the service you paid for has been given to you and the expense is to be recognized. In these days when deliveries are more often being held up, there is a tiny, tiny basis for making an argument to call a small portion of the cost as prepaid, because full delivery has not occurred. But that would mean keeping exact track of the progress of each delivery which is time consuming = expensive, and likely more expensive than the tiny cost deferral benefit.

 

[Rangerhopps]

Thanks Kirby! That's where my head was at also. Trying to balance internal presentation desires and back-end work to present it fairly.