IAS 34 Volume Trade Discounts

Discussion in 'Exams and Studying' started by accountingstudent1999, Feb 4, 2019.

  1. accountingstudent1999

    accountingstudent1999

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    Hi all, Can someone help we how i should account for the above? your help would be really appreciated.

    I have to prepare the financial statements for Q1 and Q2
    I know that I should account for the trade discount in Q2, but should i estimate using the 475,000 sales or 875,000 since now accounting treatments were reflected in Q1?

    And would the double entry be DR sales CR payables, or DR P&L and CR Payables?
     
    accountingstudent1999, Feb 4, 2019
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  2. accountingstudent1999

    Fidget VIP Member

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    Interesting question!

    Sound more like a contingent asset (IAS 37) to me - a possible future inflow of benefit to the the company that isn't fully under its control.

    Despite the track record of achieving the required 1.5m eu purchases in prior years, Brexit has put a spanner in the works in the current year.

    By the end of the second quarter, purchases of 875m eu have been already been made with orders totalling another 500m eu for delivery in the 3rd quarter - leaving only a 125m eu order needing to be placed before the end of the year to meet the target.

    But there's nothing in the question to suggest that the 1.5m eu will actually be met, so personally, I wouldn't account for it all on that basis.
     
    Fidget, Feb 4, 2019
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