Treatment of discount on purchase of fixed asset

a fixed asset is purchased for Rs 73440, but the payment is made for Rs 72073. and the due entry has been passed for Rs 72073 in the books. Is this correct to make due entry of Rs 72073 in the books ?

What will be the treatment for the short payment of Rs 1367 ???

Replies (6)

Has he supplier accepted the payment of 72000?

yes... the supplier has accepted the payment

have you checked your balance in the books of supplier

The discount should hav been booked at the time of making it due

You will need to follow the principle laid down in AS-10 Accounting for Fixed Assets.  As per the AS any discount or rebates received on the purchase of FA shud be reduced from the cost of the asset..

However before that ensure that the actual cost of the asset, teh amount stated in the bill & the amount paid to the supplier should match each other.

Sir, a step further in this - would like to know the treatment of discount received in subsequent year. Asset was purchased in March as per terms if payment made within one month additional discount was available / refundable. In year 1 full amount was accouted for and depreciation claimed accordingly, the cheque for discount was received in year 2. Kindly suggest the treatment of discount - effect on Fixed Asset account, Depreciation account & Profit and Loss account.

Thank You

 

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