Relation between Return of goods purchased and Credit Note.

[Khazar]

Hello, dear members.

I got one situation in a company in which I am working.

The company is drug distributor and purchase most of drugs and medicines from abroad.

But some products expire date, so the company accountants demonstrate the amount of these products as "return of goods". This process continue during 2017.

But on the other hand supplier does not show the amounts on it accounts as "return of sales", instead of it, it gives our company "credit note" in that amount. The date of credit note is 2018.

Return of goods happens in 2017, credit note comes in 2018.

Question:

According to accounting standards (IFRS or IAS) how my company has to show the balance of supplier for the end of 2017?

 

[Fidget]

Sounds like a "Sale or Return" agreement whereby the purchasing company buys goods to resell under an agreement that if they don't sell, then they are returned to the supplier and the supplier then gives a credit for the amount back to the purchaser.

For 2017, the company would accrue for the value of the expected credit note to an accrued income account - it would not be debited directly to the supplier's account until the actual credit note turns up.