CERTYNEX IFRS ACADEMY

The cooperative Gaudrette buys 5,000 bags of fertiliser at 30 each, that is 150,000 excluding tax. The contract provides for a rebate of 6,000 on this batch, earned upon delivery, and transport to its silos costs 4,500. Its controller computes a unit cost of 30.90, that is (150,000 + 4,500) / 5,000. What is the error?

The rebate of 6,000 was not deducted: the cost is 148,500, that is 29.70 per bag.

Transport should not have been included, the correct unit cost being equal to the invoiced price per bag.

The rebate should have been recognised as income for the period, so the unit cost of 30.90 computed by the controller is correct.

The computation is correct, the rebate being taken into account only when the bags are resold.