Can Target Incentive Discounts received from suppliers be reduced from the value of closing stock? What is the correct GST treatment for such discounts?
Also, if the discount is not adjusted, it result in overstated profit because the Unsold closing stock is shown at a higher value.
Suppliers' Incentive Discounts Can Reduce Closing Stock Value When Specific Accounting and GST Conditions Are Precisely Met Target Incentive Discounts received from suppliers can be adjusted against closing stock value under specific accounting and GST conditions. Adjustment requires meeting pre-agreed contractual terms, ensuring the discount relates to unsold inventory, and following proper accounting principles. GST treatment mandates pre-existing agreement, specific invoice linkage, and proportionate Input Tax Credit reversal. Failure to adjust may result in overstated profit and misrepresented financial statements. (AI Summary)
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