09 March 2015
As per CAS 6, while determining material cost we deduct trade discount but why we do not deduct cash discount from total cost? watts the difference between these two?
20 March 2015
Cash discount is financial in nature, as we receive it for making early payment for the goods purchased. As Financial expenses/incomes are not considered to be the part of cost of production, thus excluded from cost of materials. Trade discount on the other hand is received as a normal practice, thus deducted from material cost.
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