Accounting treatment for sales promotion expense

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2013 I want to know the accounting treatment(Journal entry) for Sales promotion expense. Gift issued to customer in the event of aadi/diwali bumper sale.
And Credit of VAT availble on purchase of gift items. Can purchase of Gift such as TV,kitchen appliances, Home appliances,phones treated as FA.

I have a confusion on it. give me your views

CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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10 July 2013 whatever gift issued to customers mark them as "sales promotion expenses" and directly debit to profit & loss account.

no credit is available on the same, since it is consumed by you. and for consumer no credit is available.

whatever gift you have given, since physically you dont have, cant mark them as fixed assets.

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2013 It can be treates as sales promtion expense - correct
but can we claim VAT? in relation to sales

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CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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10 July 2013 yes, if you are in trading of gift items, then can claim input since you are paying output.

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2013 Ya correct thank you