Hi all

For those companies who offer settlement discount, should we have an account to record the probable allowance for settlement discount or we should net it off against the revenue?

Thank you in advance.


Nyasha Marauka

I think one can have Provision for allowance account and as and when allowance is passed the same can be trasferred to Revenue account.

My chart of account follows logic of gross sales and net revenue in P&L.

In net revenue you report sales after all kinds of settlement discounts, bonuses, ect.

In B/S you should have provision account also, to match poper timing.



Dnia 26-01-2008 o godz. 15:13 Nyasha Marauka napisał(a):

Isnt this settlement discount more of a finance charge? If so, then there should be no change to gross revenue but the requisite entry disclosed under Finance heading instead based on actuals.

Also, how would you work out a proper allowance? Is there a properly recorded precedence which can be applied in general to all the clients of the company? Does your client actually maintain adequate records to determine the percentage? This information would be required to compute an allowance whether under IAS 39 or IAS 37 depending upon the actual terms of the settlement discount and its true nature and hence applicability of the relevant standard. I think more information is required over here.

In regard to settlement discount i would like add and get your view:
– If you give a customer discount for early payment or  cash disocunt, that discount should be reported under finance expense as the nature of discount is finance related
– While if you make a disocunt becuase thta customer is a good and old cusotmer of yours that should be reported on net basis, ie, the should be reported on net basis..


From: Nyasha Marauka <nmaruaka@deloitte.co.zw>

Date: Mon, Jan 28, 2008 at 2:37 PM
To: ifrs@ifrslist.com

Thank you very much.

Hi Nyasha,
It depends on the policy of the company, there is a NET method wherein no allowance is being set-up and there is also GROSS method, where allowance account is used. Either way, the effect on the financial statements should be the same, the difference only lies on the use of the allowance account which serves as a monitoring account.
Hope this helps,

i would like to add something that allowance for settlement account is a contra account so it must be created in the chart of account & to reflect in financial statements for user’s information purposes.

Dear all
Hi I am Suraj ratan Mohta from India. Working in a real estate compnay. i need some advice on the IFRS related from the comitte member. We follow Indian GAAP
My query is
1) Is it necesary to revalue the investment property as per IFRS.
2) if ane one can provide me the template
Suraj Ratan Mohta

IFRS does allow for revaluation as opposed to US GAAP which does not but what are the circumstances for revaluation?

Hi Suraj,
Investment property is defined as property held (by the owner or lessee under a finance lease) to rentals and/or for capital appreciation, rather than for
use in the production or supply of goods and services for administrative purposes; or
-sale in the ordinary course of business
IAS 40 covers investment property held by all enterprises and is not limited to enterprises whose main activies are in this area. Under IAS 40, an enterprise must choose either a fair value model  i.e. investment property should be measured at fair value and changes in fair value should be recognised in the income statement; or a cost model (the same as the benchmark treatments in IAS 16, Property, Plant and Equipment), i.e. investment property should be measured at depreciated cost (less any accumulated impairment losses).

In order to value investment properties, an independent valuer who holds a recognised and relevant professional qualification, and has recent experience in the location and category of the properties being valued.

The valuer should determine the fair value  of the properties based on current prices in an active market for similar properties in the same location and condition and subject to similar leases and other contracts.


Fred Chipasha

Dear All,

The explanation from Fred is correct the only challenge will come in when the real estate company have REITs which I feel needs a different treatment from the revaluation of the property, but the unit or share in most cases will follow the trend of revaluation of real estate, and the units must have a value at the current market rate (IFRS for investment entities), these are some of the cosmetics in real estate that you must consider.