Cash Back from purchased

[Sharif Ul Alam]

Our company is an advertising & event management company. we had bought a tender. But we did not participate in competition & got cash back. How can I record this transaction in accounting system. Please give me the answer based on golden rules of accounting.

 

[Drmdcpa]

It should reduce the expense of the purchase. If the purchase was capitalized in a different year such that you cannot reduce the price on the books, record the cash as miscellaneous income. Alternatively if the purchase was capitalized it could be treated comparable to an impairment, but this would not be preferred.