Account 157 – Goods on consignment

1. Rules for accounting

a) Goods on consignment which are recorded to account 157 shall be accounted according to original prices as prescribed accounting standard ―Inventory‖. The account 157 ―Goods on consignment‖ only records costs of goods or finished goods sent to customers or agents (consignees), services rendered transferred to customers under business contracts or orders by the enterprise (consignor), those goods are not determined as 'sold' (the goods or services on consignment are not recorded to sales revenues during a period).

b) The goods or finished goods recorded to this account are still under ownership of the consignor, they must be recorded in the accounting record in every consignment until they are sold.

c) The cost of transport, material handling, payment on behalf of customers, etc shall not be recorded to this account. The account 157 may record every type of goods, finished goods or services rendered on consignment to every customer or consignee.

2. Structure and contents of account 157 – Goods on consignment

Debit:

- Cost of goods or finished goods on consignment sent to customers, consignees; or dependent accounting units;

- Cost of services rendered to customers, but they are not sold;

- Ending cost of goods or finished goods on consignment but they are not sold (if the consignor uses periodic inventory system).

Credit:

- Cost of goods, finished goods, services rendered on consignment which are sold;

- Cost of goods, finished goods or services on consignment which are returned;

- At the beginning of accounting period, cost of goods, finished goods, services rendered which are not sold and transferred (if the consignor uses periodic inventory system).

Debit balance:

Cost of goods, finished goods, services rendered on consignment which are sold during a period;

3. Accounting methods for several major transactions:

3.1. Enterprise using perpetual inventory system.

a) When consigning goods or finished goods to customers, consignees under economic contracts, according to delivery order, the following accounts shall be recorded:

Dr 157 – Goods on consignment

Cr 156 – Merchandise inventory.

Cr 155 – Finished goods

b) Cost of services rendered to customers, but they are not sold during a period, the following accounts shall be recorded:

Dr 157 – Goods on consignment

Cr 154 - Work in progress.

c) When consigning goods or services to customers and they are sold during a period:

- If the indirect taxes are not separable at the time in which the revenues are recorded, the revenues from sale of goods, finished goods or services (tax-exclusive prices) shall be recorded:

Cr 131 – Trade receivables

Cr 511 – Revenues

Cr 333 – Taxes and other payables to the State.

- If indirect taxes are not separable, the revenues including taxes shall be recorded. When paying indirect taxes, a decrease in revenues shall be periodically recorded as follows:

Dr 511 – Revenues

Cr 333 – Taxes and other payables to the State.

- And the costs of finished goods sold which are delivered to inventory shall be recorded as follows:

Dr 632 – Costs of goods sold

Cr 157 – Goods on consignment.

d) If goods or finished goods are consigned for sale but they are returned;

- If those goods or finished goods are still merchantable or repairable, the following accounts shall be recorded:

Dr 156 – Merchandise inventory; or

Dr 155 – Finished goods

Cr 157 – Goods on consignment.

- If those goods or finished goods are not merchantable or repairable, the following accounts shall be recorded:

Dr 632 – Costs of goods sold

Cr 157 – Goods on consignment.

3.2. Enterprises using periodic inventory system.

a) At the beginning of accounting period, if cost of goods or finished goods sent to customers are transferred but they are not sold during a period, or cost of goods or services consigned to customer but they are not sold during a period, the following accounts shall be recorded:

Dr 611 – Purchases (for goods)

Dr 632 – Costs of goods sold (for finished goods or services)

Cr 157 – Goods on consignment.

b) At the end of accounting period, according to the physical inventory count, the cost of goods, products (finished goods or semi-finished goods) or services rendered to customers; or consigned to consignees which are not sold at the ending accounting period:

- Cost of goods sent to customers but the payment is not accepted; goods consigned to consignees; or dependent accounting units shall not determined as sale at ending accounting period shall be recorded as follows:

Dr 157 – Goods on consignment

Cr 611 – Purchases.

- At the end of accounting period, cost of finished goods provided for customers or goods on consignment; cost of services rendered to customers who are not sold shall be transferred as follows:

Dr 157 – Goods on consignment

Cr 632 – Costs of goods sold.

Source: Circular 200