Work out rebate accrual instantly with clear inputs, formula shown and shareable results.
Rebates should be accrued through the year at the rate expected to be achieved on full-year volume, not at the rate currently earned. Accruing at the lower current-tier rate understates margin early in the year and creates a distorting catch-up at year end.
Accrual to date
Accrual = Purchases to date x Rebate rate at forecast volume
Full-year rebate
Full year = Forecast purchases x Rebate rate
The accrual must be reversed, which is why the forecast should be conservative and reviewed monthly against actual purchase pace.
As a reduction in inventory cost, released to cost of sales as the goods are sold — not as other income.