Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 362: 5

Answer

Sellers sometimes give discounts to avoid changing their catalogs frequently. They also do this with the intention of concealing the true price of items from its competitors. Trade discounts are not quoted in the books since the quoted price already reflects the market value of the item.

Work Step by Step

Moreover, there is no need to recognize the previous price from an accounting standpoint and neither is it required by accounting principles.
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