Where do you book sales rebates? Customer will get 1% rebate on all sales over x amount. Should this reduce sales or be part of cost of goods. Up until now, these rebates have been smaller, but in 2016 could be very large. What is the best practice. Thanks!
Sales Rebates: Do you reduce sales or increase cost of goods?
Answers
Volume rebates are a reduction to sales.
Rebates are sales incentives and should be accounted for as reduction of revenue. Please refer to FASB ASC 605-50 "Revenue Recognition: Customer Payments and Incentives"
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FP&A