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considerations other than for prompt payment”. Trade discount is allowed either expressly through an
agreement or through prevalent commercial practices in the terms of the trade and the same is adjusted in
arriving at the selling price. Accordingly, the trade discount expected to be allowed should be deducted to
determine the estimated selling price.
Cash Discount is “A reduction granted by a supplier from the invoiced price in consideration of immediate
payment or payment within a stipulated period.”
These types of costs are incurred to recover the sale proceeds immediately or before the end of the specified
period or credit period allowed to the customer. In other words, these costs are not incurred to make the sale,
therefore, the same should not be considered while determining NRV.
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