Why is reserve for discount on debtors or creditors added to their?
Hi there. The Reserve on discount on debtors or creditors represents the amount which you are going to let go, or expected to be paid less. In simple terms, it's an amount you are ready to forgo or going to pay less. accounting standards and Indian Accounting Standards or IFRS for that matter allows a reserve created on such financial assets or liabilities to be offset with their respective assets or liabilities. In Statement of profit or loss, such discounts, at least in India, are shown separately in Profit or loss accounts, as the discount given or discount received . However, there is a popular practice of adding items of similar nature to be clubbed while showing in SPL. I hope I was able to answer your question. Thanks.