Accounting principles
On a conceptual basis, should purchase discounts be treated as a revenue or as a contra-expense (reduction of purchases/cost of sales/ inventory)?
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International Accounting Forum
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Thursday, May 24, 2007
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5 Comments:
It should NOT be treated as a revenue but as an expense. Rup
Its basically revenue according to its nature.
Hi,
The discount that you get upon buying an item should be adjusted against the purchasing cost. Hence if it is an inventory item, the cost of inventory should be deducted to the extent of purchase discount.
Regards
Hi,
If you take it as a revenue, then it should reflect in the income statement.
Some do not record the discount depending on the situation.
It seems to me, in your case, it is contra expense.
I am a programmer. So, you can verify.
I agree, if it is a revenue, then it should reflect in the income statement.
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