There is a listed textile company. It wants to purchase a SHIS licence from the market and it is available on the value of 60% of cost.
i.e.
Face value of SHIS Licence = Rs. 1,000/-
Purchase price of SHIS Licence = Rs. 600/-
Discount Received on purchase of licence = 400/-
Please specify the accounting treatment of such amount of discount.
Whether it should be shown as income in P/L account or to be shown as advance against assets under the head CWIP of Balance sheet.
And also specify the journal entries with respective amount for all treatment.