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Hi,
Why we do not take into account while recognizing the PPE the 5% of trade discount if the payment would be paid within 15 days?
Should we reevaluate the initial figure of PPE later (I don’t think so) or should we recognize this as an income or else?
Thank you for the clarification,
MarzenaHi Marenza,
The 5% discount only applies if we pay promptly when we account for an early settlement discount. If we pay promptly then we have a discount received and the double entry is DR Payables (100%) CR Bank (95%) CR Discount received. There is no adjustment to the PPE accounts.
Thanks
Chris
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