How to Record Bill-and-Hold Revenue for Equipment
Accounting for medical equipment sales where the customer has purchased the item and assumed control but requested a delay in shipping due to site preparation.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Receivable | Asset | 125,000.00 | - |
| Medical Equipment Revenue | Revenue | - | 125,000.00 |
| Cost of Goods Sold | Expense | 80,000.00 | - |
| Finished Goods Inventory | Asset | - | 80,000.00 |
💡 Accountant's Note
Under ASC 606, revenue is recognized for bill-and-hold arrangements when the customer obtains control, even if physical possession is retained by the seller. This requires that the reason for the hold is substantive (e.g., hospital construction delays), the product is identified separately, and it is ready for immediate shipment.
Practitioner & Systems Framework
💻 ERP Architecture
Flag inventory as 'Sold - Held for Customer' to prevent double-counting or unauthorized shipment.
⚠️ Audit Flags
Verification of physical segregation of inventory and customer-initiated request documentation.
📄 Required Documentation
Formal bill-and-hold agreement and evidence that the hospital requested the delay.
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