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cost of inventories according to Kaplan:
any other directly attributable costs, less trade discounts, rebates and subsidies.
Open tuition text says
• but excludes trade discounts, rebates and similar deductions
What is correct?
Both are correct – maybe “excludes” could be taken to mean that discounts etc are not deducted
That is not the intention of the note – the discounts etc ARE not included (ie excluded?) in the calculation of the inventory figure
Of course, the figure for trade discounts etc would not be known by the purchaser – or, at least, would already have been deducted when the price is shown on the invoice from the supplier
Both Kaplan and the notes intend to state that inventories should be valued at the lower of cost and net realisable value where “cost” is to be taken as the cost to the purchaser, net of any discounts etc
OK?
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