supplier rebates re purchases

Question

What is the best way to post supplier rebates that are starting to come on products that were sold during the year - they come on a credit purchase invoices that go on our account. I need to post the rebates to the correct product. Thanks

RandyW · Accepted Answer

Hi, 
 If the rebate is based on your sales of the product, IFRS rules are to consider it as a reduction in selling costs. 
 If you receive a rebate based on your purchases from a supplier, IFRS rules are to record it as a reduction of cost of the goods: 
 1. Enter the rebate as a negative purchase invoice amount, post the rebated amount to the to the related COGS account. 
 2. For the portion of product that you still have in inventory: 
 Enter an inventory adjustment, with a line amount for each affected product. Enter only a dollar amount (no quantity) that you need to reduce the cost on hand by. Over-ride the default Inventory Adjustment account to the COGS account. 
 For example, you bought 200 Grapple Grommets last year, and that earned you a $400 rebate. If you had 125 left, you would reduce the value on hand by (400 / 200 * 125) $250. 
 The ones that have already been sold are accounted for as the remaining $150 credit to COGS for that item. This will not have any effect on your records of past sales of the item(s). Customer sales profit reports also can't show these general amounts. 
 If the amount isn't material, you could just apply it to reduce COGS by the amount of the rebate. 
 I hope that helps, please post back, and flag any answers that you find helpful. This also helps anyone else looking for answers in these forums. 
 Randy

Sage 50 Canada

supplier rebates re purchases

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