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QuestionsCategory: MiscellaneousProvision for sales rebate on notes to financial statement
Carter Lim asked 4 years ago

Hi Victor/Rusmin,
May i know what is meaning by ‘provision for sales rebate’ which is appear on other payables account ?i noticed there is significant amount.  Is there pros & cons ?
Thanks.

3 Answers
Victor Chng answered 4 years ago

Hi Carter,
 
May I know which company you are referring to ? I need to know what the company business is so that I can understand what the sales rebates are.

Carter Lim replied 4 years ago

NTPM

Victor Chng replied 4 years ago

Ok Carter, let me take a look and get back to you

Victor Chng answered 4 years ago

Hi Carter,
A provision is an amount set aside for use later on. In this case, the company is setting aside a sum for sales rebates that could be returned to customers.
 
On the side note, i can;t seem to find the sales rebates in their AR2016 annual report.

Carter Lim replied 4 years ago

Hi Victor,
i noticed that the provision for sales rebate amount RM16 mil plus is only appear on financial report 2017 under part of other payable.

What is the pros & cons for this?

Thanks.

Victor Chng answered 4 years ago

Hi Carter, 
As mentioned above, the sum is set aside for possible rebates which may no happen also. In this case, it seem like a conservative approached by the management. As we do not know what contractual agreement NTPM did with the customers, hence the possible cons may be that the amount of provision may be underestimated. 

Carter Lim replied 4 years ago

Noted. Thanks.