Reservation, sales contract and payment plan
Accounting for property sold on installments: reservation as a customer advance, revenue recognized when the contract is signed (IFRS 15), inventory derecognized at cost, a French-method payment plan, contract statuses and how GoSoft does it automatically.
This is a real estate company's core operation: selling a lot or a home on installments. GoSoft records it automatically: you load the contract and its payment plan, and the system books the sale and keeps the customer's receivable.
- Tell a reservation from a sales contract and their accounting treatment.
- Write the sale entry and the inventory derecognition entry.
- Understand a payment plan with down payment, principal and interest.
- Know the contract statuses and which entry each one generates.
Reservation and contract: two different moments
| Moment | What it is | Entry |
|---|---|---|
| Reservation | The customer holds the lot with a payment but has not bought yet | No sale. The money collected is a customer advance (liability) |
| Sales contract | The purchase agreement is signed and control of the property transfers | The sale is recognized and the inventory is derecognized at cost |
Revenue is recognized when the customer obtains control of the asset. In a lot sale this normally happens when the contract is signed and possession is handed over, even if the price is collected in installments. The financing component (installment interest) is not part of the sales price: it is recognized as finance income as it accrues. GoSoft applies that split.
Example: sale of lot 01 in Unidad 02
- Sales price (principal): 60,000,000
- Cost of the lot (see property inventory): 24,000,000
- Down payment: 6,000,000
- Financed balance: 54,000,000 in 24 monthly installments at 1% monthly interest
Sale entry (when the contract is signed)
| Account | Debit | Credit |
|---|---|---|
| Accounts receivable (Persona0001 Apellido0001) | 60,000,000.00 | |
| Revenue from property sales | 60,000,000.00 | |
| Cost of properties sold | 24,000,000.00 | |
| Property inventory | 24,000,000.00 | |
| Equal totals | 84,000,000.00 | 84,000,000.00 |
The gross profit on this sale is 60,000,000 − 24,000,000 = 36,000,000, recognized in February even though collection takes two years.
The payment plan
The plan states how much and when the customer pays. Each installment has two parts:
- Principal (amortization): reduces the receivable.
- Interest: the price of financing; recognized as income when collected.
With the French method (level payment) this example's installment is 2,541,967.50:
| Installment | Interest (1% of balance) | Principal | Principal balance |
|---|---|---|---|
| 0 (down payment) | 0.00 | 6,000,000.00 | 54,000,000.00 |
| 1 | 540,000.00 | 2,001,967.50 | 51,998,032.50 |
| 2 | 519,980.33 | 2,021,987.17 | 49,976,045.33 |
| 3 | 499,760.45 | 2,042,207.05 | 47,933,838.28 |
| … | … | … | … |
| 24 | 0.00 |
Interest falls and principal rises with each installment. In interest-free plans (like the contract in the screenshot) every installment is principal.
Because of rounding, the installments rarely add up exactly to the balance. In GoSoft the last installment absorbs the difference and its principal is not edited by hand, so the plan always closes at zero.
Contract statuses
| Status | Is there a sale entry? |
|---|---|
| Reserved | No. Money collected is a customer advance |
| Active | Yes |
| Pending (for example, in arrears) | Yes |
| Paid / Completed | Yes |
| Reversed | Yes, plus a reversal voucher (see Reversals) |
| Voided (entered by mistake) | No; it has no effect |
GoSoft syncs the accounting only when the status changes, so the system does not slow down.
In GoSoft, step by step
Open Property sales. The list shows contracts with status, customer, property, amount and balance.
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Property sales contracts list Create the sale: choose the available property, the customer (holder) and the salesperson, the price, currency and exchange rate.
Define the payment plan: down payment, number of installments, interest rate, first due date and amortization method. GoSoft computes the schedule.
Save the contract as a reservation or as active. When it becomes active, GoSoft books the sale and the inventory derecognition.
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Contract record: holder, property, principal amounts and balance In Commercial → Payment plan you see each installment with due date, interest, principal, days and amount of arrears, amount paid and balance. Collections are recorded from there with Pay.
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Contract payment plan with arrears computed per installment In Documents you print the contract as a PDF; in Legal you follow the administrative steps (deed, registration).
- Recording revenue only as each installment is collected: understates sales and overstates inventory.
- Including interest in the sales price: inflates revenue in the period of sale.
- Treating the reservation as a sale: if the customer withdraws, you must reverse a sale that never existed.
A customer pays 2,000,000 to reserve a lot. What entry applies?
Debit bank 2,000,000; credit customer advances (or the customer's account, which carries a credit balance). There is no sale or inventory derecognition.
On signing an 80,000,000 contract for a lot that cost 30,000,000, which entries does GoSoft book?
Debit receivables 80,000,000 / credit sales revenue 80,000,000, and debit cost of sales 30,000,000 / credit property inventory 30,000,000.
Under the French method, what happens to interest and principal over the plan?
The installment is level; interest decreases and principal increases with each one.
Why is installment interest not booked when the contract is signed?
Because it is finance income that accrues over time; GoSoft recognizes it as each installment is collected.