Accounting Of By-Product

By-product accounting depends on the circumstances under which it is realized The following could be the possible circumstances of a by-product realization.
* At the separation point
* After further processing
Based on the possible circumstances for the by-product realization, the following are the main types of by-product accounting.

1. Non-cost or sales value method

Existence of sales value method focuses more on sharing joint costs by by-products realized determining cost of by-product.These methods are the followings:
* Other income or miscellaneous income method
* By-product sales added to the main product sales
* By-product sales value deducted from total cost.
* Credit of by-product sales value less selling and distribution expenses.
* Credit of by-product sales value less selling and distribution expenses as well as cost incurred after split off.
* Credit of by-product sales value less selling and distribution expenses costs incurred after split off and estimated profit or reverse cost method.

2. Costs Methods

The existence of a cost method provides opportunities to ascertain the cost of by-products. It takes a closer look on the cost front and seeks to allocate joint cost to the by-product realized incidentally in the process of producing the main product. The types of the techniques available under cost method are following:
* Opportunity or replacement cost method
* Standard cost method
* Apportionment on suitable basis.