How can income be accounted for in the income statement of by-products?

Miscellaneous or Other Sources of Income:

When the market value of a by-product is very low or non-existent in comparison to the primary goods, the selling value of the by-product is recorded in the Profit and Loss Account as other revenue or miscellaneous receipt.
Byproducts are materials that are formed in addition to primary products during the manufacturing process. They usually serve no use other than in auxiliary goods or recycling, although they do exist for accounting purposes, which is an issue. Accountants must also allocate costs to all byproducts in order to properly value production. The sales approach and the manufacturing method are two options for doing this.

Byproducts are not counted in the sales method until the sale has been completed. In this scenario, the corporation allocates a particular amount of value to each byproduct, which it subsequently recognizes when the unit is sold. This effectively postpones the accounting phase till a transaction occurs. Byproducts are still considered inventory till that time comes. If scrap metal is a byproduct of manufacturing, for example, the corporation will record it as distinct inventory and wait for a buyer using the sales technique. Only once the scrap is sold will the value of the scrap be transferred to the profit accounts. Of course, before the product and byproduct are separated out for separate sales, the values recorded prior to the byproduct sale can only comprise additional revenues and expenditures.

The sales approach is advantageous since it allows for faster accounting processing during the manufacturing process. It may also be more advantageous when it comes to various items. For example, a mostly worthless byproduct with just minor value, such as sawdust, is more beneficial to account for using the manufacturing procedure. However, if the byproduct is a distinct item with more intrinsic worth, the sales approach may be more beneficial in accounting for these sales.

While the sales approach might assist track transactions more accurately, it can also be an impediment to the company's objectives. For example, a manager who wants to enhance operational income data might wait until it's low and then start selling byproducts widely to boost revenue, making operations analysis inaccurate and figures bloated.