Q. Sale Invoice to Parent company

Question

A Indian subsidiary company raise sales invoice to its Foreign parent company that is equal to Cost + Markup.
But for calculation, Cost excludes Finance cost, Foreign fluctuation, some other expenses instructed by the HO, Statutory dues payable (TDS), Expenses payable and sundry creditors.  
And balance sheet items I.e  statutory dues payable, expenses payable and sundry creditors, consider the same in next billing when it is actually paid.

My question is:
1) Can we excludes some expenses from Cost on the instructions of HO from billing like Audit Fee, Accounting fee, Learning courses fee etc.

2) Expenses are booked on accrual basis in the books. Can we do the sales invoicing calculation (cost+markup) on cash expenses (bill for only those expense which are paid).

3) Do we need to do the provisioning of differential amount arises due to exclusion of amount from cost ie. expenses payable, statutory dues payable and sundry creditors

Answer 1

The billing to parent company depends on the terms and conditions of the agreement with parents. If agreement prescribes for the cost + markup then cost includes both the expenses which is paid and yet to be paid.

If billing includes only cash expenses then rest of the item shall be considered as unbilled revenue to complete the revenue accounting.