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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Discount received
Hello,
the Kaplan text book says that discount received is listed as other income. Discount allowed, on the other hand, is a reduction in the revenue. If discount allowed is a reduction in the revenue, then discount received should be reduction in the expense or am I wrong? Discount received should be the opposite of discount allowed. Thanks for helping me!
It depends on the reason for the discounts.
If they are trade discounts, then the sales and purchases are recorded at the lower amount.
If they are discounts for early payment, then they should be shown as other income or as an expense (not affecting gross profit).