Year end revenue recognition — rebate accruals - Enable blog

▤ Summary

But for those in the building supplies sector, those working in buying groups, and many wholesale distribution companies, revenue recognition is hampered by supplier rebates, retrospective discounts and other promotions. If companies dont account enough money to pay upcoming expenses, theyre often faced with a last-minute challenge to reallocate funds and cover unexpected claims. Monsanto, the suppliers of the popular weedkiller -- Roundup, were given an $80m penalty after it allegedly misstated its earnings, owing to problems with rebate accounting in France, Germany and Canada. It is reported that payments made to distributors were recorded as selling, general and administrative expenses, rather than rebates, which increased gross profits from Roundup in those countries. This forced businesses to adhere to strict and harmonised rules for revenue recognition, and fuller disclosure on their financial statements — especially those that have to account for rebates, discounts and incentives.

▦ Linked Companies

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$50M to $100M