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Where an entity is entitled to VAT refunds due to higher VAT recovery rates, but which have not yet  been refunded by the tax authorities yet - usually take up to six months. Can recognition of this gain/income be deferred until cash actually received (i.e. not current year, but next year),  All other revenue/gains is accrued in current year when earned.

Many thanks

in IAS 18 - Revenue by

1 Answer

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This can be considered a contingent asset.
Refer IAS 37.33 - "contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate."

If you are certain that the refund will be received, you can recognize it as an income in the current year and show it in the balance sheet as a current asset.
by Level 2 Member (3.4k points)