Question 1

Global Wholesale Distributors offers a 10% trade discount for bulk orders and a 5% settlement discount if payment is made within 14 days. A customer places a bulk order with a list price of $10,000. It is highly probable the customer will take the settlement discount. At what amount should the initial revenue be recorded?

Accepted Answer

Apply the trade discount first. Then, under IFRS 15, if a settlement discount is expected to be taken, deduct it from the revenue at the point of sale.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Adding the percentages together (15%) and applying it to the list price.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 2

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