22 May 2014
If a firm purchases a fixed asset worth Rs.10000 on credit recording in the books as: FIXED ASSETS A/C DR. TO SUPPLIER'S A/C Then, at the time of making payment, discount of Rs. 2000 is received. What will be the treatment of such discount?
22 May 2014
Dear, In accordance with the accounting standard Accounting for Fixed Assets', discount of Rs. 2000 is to be deducted from original cost i.e. Rs. 10000 to arrive at the historical cost. Because it will be deemed to be price adjustments and hence will have to be adjusted from the original cost of fixed asset. Regards
23 May 2014
depends, i believe this is a cash discount...so should not be deducted from the cost. only trade discounts and rebates should be considered for deduction.
CAclubindia
