Treatment of volume discount whether to adjust in turnover or not. How it is treated in IFRS
24 July 2010
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Volume Discount in Indian books we reduce it from the turnover but for UK accounting how it will be treated whether as direct cost or to be reduced from turnover.
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Paragraph 10 in IAS 18:
The amount of revenue arising on a transaction is usually determined by
agreement between the entity and the buyer or user of the asset. It is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity.
Therefore, you reduce sales revenue (turnover) for any volume discounts. You don’t recognize an expense/cost.
Regards
Patricia
Treatment is similiar under UK GAAP as well
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