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My thanks to everyone for your contributions to this string.Your inputs
confirmed the initial stance I took with my client and gives me more confidence
in moving forwards.
Many thanks
Allan Godfrey
>A.P. Godfrey Consulting Inc.
>http://www.linkedin.com/in/allangodfrey
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| | | ---------------Original Message---------------
From: Roy B
Sent: Tuesday, December 07, 2010 4:22 AM
Subject: Cash Discounts for Distribution Companies
Hi Allan,
I think your question has been answered. Trade discounts are a reduction of the purchase cost of inventory, cash discounts are financial income. What more can we add? We have seen a specific reference to trade discounts in IAS 2 (but no specific reference to cash discounts so have to assume that these are not treated the same because of their omission). I have been unable to find any authoritative document specifying the accounting treatment of cash discounts. There are some definitions at www.principlesofaccounting.com that might be useful (call up the website and search on discount). A Google search throws up many references but none that I would call an absolute authority. A search of US GAAP for instance threw up nothing useful.
I think it is one of those things that we accountants just "know". Anyway, I hope the discussion has helped you.
Regards, Roy
Roy Brookes AFA, FInstBA,
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