Murabaha — Asset Sold to Customer at Cost-Plus Markup
Bank sells the purchased asset to the customer at cost plus an agreed profit margin under the Murabaha contract.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Murabaha Receivable (Customer) | Asset (+) | 120,000.00 | - |
| Murabaha Inventory / Asset | Asset (−) | - | 100,000.00 |
| Deferred Murabaha Profit | Contra-Asset / Liability (+) | - | 20,000.00 |
💡 Accountant's Note
The Murabaha profit (JOD 20,000 markup on JOD 100,000 cost) is deferred and recognized over the repayment period. The full receivable (JOD 120,000) is recorded. The deferred profit is released monthly as the customer makes installments.
Practitioner & Systems Framework
💻 ERP Architecture
In Oracle FLEXCUBE Islamic, the Murabaha contract records the cost price, profit amount, and tenor. The deferred profit is automatically amortized over the installment schedule. The accounting treatment mirrors a conventional loan in economic substance but differs in form — the profit is not 'interest'.
⚠️ Audit Flags
Auditors verify deferred profit amortization matches the Murabaha installment schedule. Early settlement of Murabaha (where the bank returns part of the unearned profit) must be reflected correctly. The profit rate must be fixed at inception — any variable or restructured profit calculation requires fresh Shariah approval.
📄 Required Documentation
Murabaha sale agreement, installment schedule, deferred profit amortization schedule, early settlement policy, and Shariah Board sign-off on the contract structure.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.