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I have asked various times but still stuck in this.
My question is that like we have IFRS-15 for Revenues from Credit customers so we do not have discount allowed account.
In opposite to it, we do not have any rule in my knowledge. So we use discount received account.
Is this due to prudence concept, that we never want to understate liability of Account payable before getting any discount?We certainly do not use a discounts received account when we are talking about discounts given to customers! Discounts received are discount received from suppliers.
It is simply that instead of showing the revenue before discounts and then recording discounts allowed as a separate expense, we show the revenue after discounts. So the effect on the net profit is exactly the same.
I was saying that we have discount allowed for customer, but when we see other way round, we have discount received from customer. There is not same treatment for both as we do variable consideration in Discount allowed to customer but no such treatment for discount received. Is this due to prudence concept?
I hope I am able to convey my question.The end result in the same for both in terms of the effect on the net profit. It is simply a question of the presentation being different.
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