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Recognition of revenue

12 February 2023

if a company sale it's products as buy 1 get 1 free how it is recorded in books mean I want to ask whether the cost of one product is debited to p&l a/c as promotional expenses or just record sales ??

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8 Replies

sabyasachi mukherjee (27107 Points)
Replied 12 February 2023

First the heading is not correct.
Second here its a promotional offer to boost sales.

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Atharv Sankliya (1323 Points)
Replied 12 February 2023

So do we have to debit the cost of free product??

sabyasachi mukherjee (27107 Points)
Replied 13 February 2023

It depends on the company's policy.

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Atharv Sankliya (1323 Points)
Replied 13 February 2023

Sir is there any accounting standards to deal with this situations ??

Yasaswi Gomes new (Finance ) (4492 Points)
Replied 14 February 2023

Revenue recognition. If you don't find it there in transaction cost section, you can do accounting techniques.

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sabyasachi mukherjee (27107 Points)
Replied 14 February 2023

Free units cost will be absorbed by good units.

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Atharv Sankliya (1323 Points)
Replied 14 February 2023

You mean to say the cost of free product is adjusted by the sale value ?

Yasaswi Gomes new (Finance ) (4492 Points)
Replied 14 February 2023

I don't see anything wrong with it. That's what I was saying about unwinding the discount. Other products or on bundle of services. Which ever product has a problem.