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Valuation of Inventory

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(Querist)
13 February 2009 AS-2 Valuation of inventory states that while determining the cost of the inventory trade discount, rebates, etc. is deducted to arrive at the cost. However, cash discount is not included. It states that cash discount is to be shown as an income in the P&L statement. Why is this so?
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
13 February 2009 Cash Discount is received on account of early payment which is a financial matter and source of income and hence to be excluded from valuation of inventory.
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