Accounting for the loss of recalled defective products. Defective products do not mean complete abandonment. Some can be recalled for repair, which does not mean returns. The recall process involves a lot of costs, such as personnel. Dispatch fees and transportation fees are indispensable, details are below.

Accounting treatment for loss of recalled defective products

When defective products are actually recalled, the relevant expenses mainly involve announcement fees, dispatching personnel fees, transportation fees, rental of substitutes, or Consumption, as well as the costs and expenses incurred in recall-related matters such as litigation and compensation. Since a certain amount of defective product recall reserves are accrued at the time of sale, the accrued expenses should be offset first, debit the "Accrued Expenses - Defective Product Recall Preparations" account, and credit "Bank Deposits" or "Other Accounts Payable" suject. When the accrued expenses are not enough to be offset, the difference shall be included in the operating expenses in one lump sum, and the "operating expenses" account will be debited and the "bank deposits" or "other payables" account will be credited.

The cost of recalling defective products not only comes from various sources, but also involves many fields, functional departments and individuals of the company, as well as the company's suppliers, and is related to the interests of the government and the public. The resulting defective products The process of testing, handling returned products, and scrapping products is cumbersome, which increases the difficulty of defective product recall management.

Accounting treatment for loss of recalled defective products

Recall of defective products does not equal sales return

Sales return refers to products sold by an enterprise due to non-compliance with requirements, etc. The reason for the return occurred. The defective product recall is aimed at mass failures, which are caused by certain problems during the product manufacturing process. The manufacturer repairs, replaces, and takes back the recalled products. Therefore, the defective product recall does not mean a sales return.

Product recall does not equal the loss of scrap

After a product recall, it mainly involves the repair, transformation, sale after repair, or scrapping after recycling. On the surface, this seems to be similar to the loss of repairable or irreparable waste found after inspection of finished products, but it is not. The purpose of setting up the "waste loss" account is to strengthen the control of production losses and prompt the company's management to analyze the causes of losses in a timely manner.

Defective product production stage. The product recall system is to effectively eliminate hazards to personal and property safety caused by defects in design and manufacturing of various products. Although the probability of a defective product recall is extremely small, as long as the manufacturer or seller sells the product and the product meets the five conditions for realizing sales revenue, the revenue should be recognized as sales revenue at the point of sale.

It is impossible for an enterprise to provide any guarantee for products or services that have not yet been sold, so the point of sale is the starting point for the impact of the recall system on corporate financial accounting. At the point of sale, the company should estimate and recognize the possible future outflow of economic benefits, that is, accrue the possible recall costs and include them in the expenses of the current period.

The accounting treatment for the loss of recalled defective products. If there is more than one batch of recalled products, the financial treatment will be more complicated, and some expenses must be dealt with separately. The actual problem is more complicated than the editor said. It's a little more complicated. If you can't solve it, you might as well consult a Niuchang.com teacher.