Under IFRS, when a vendor gives a volume rebate to a customer, the vendor should account for it as a(n)
A) expense.
B) reduction of revenue.
C) reduction of inventory.
D) other gain or loss.

Question

Quizplus · Accepted Answer

Under IFRS, a volume rebate is considered a reduction of revenue because it reduces the amount of revenue earned from the initial sale. This is because the rebate is contingent upon the customer reaching a certain volume of purchases, so it is not guaranteed at the time of the initial sale. Therefore, it cannot be treated as a reduction of the cost of goods sold or as an expense.

Under IFRS, When a Vendor Gives a Volume Rebate to a Customer