I have a case like the following:
Trial Balance at 31 March X1:
Sales Revenue (note1)            385,450
Cost of sales       185,050
.
.
.

Notes:

1) Included in sales revenue is 27$ mln, which relates to sales made to custemers under sale or return agreements. The expiry date for the return of these goods is 30 April x1 and the company has charged a mark-up of 20% on cost for there sales.

Required to prepare the income statement for the year to 31 March x1

for that case i need to do adjustments decreasing the sales and receivables with the selling price?

I would like to have any assistance on that do understand better.

Thanks

Turnover should only represent actual sales, sale or return agreements do not represent actual sales, as there is a chance that a return could be made before expiry, meaning you would have overstated your Turnover.

You reduce your sales by the $27 million, and reduce your cost of sales by the $27m less 20% (cost amount) = £22.5m, reducing overall Gross profit by $4.5m.

Look for the definition of Turnover under the standard

thanks a lot, you help me.

IAS 2 (Inventories) is comparatively an easy standard to understand. But it contains many adjustments that we overlook at the time of reading or revising it. Reason is that it is related to the production accounts with which we are not directly connected as a reporting student. So I considered the need to develop a summary of IAS 2 which covers all the critical, complex and easy concepts which are overlooked normally. Problem with IASB summary is that it is just a summary that does not include interpretation. But summary given below contains interpretation of the difficult concepts as well.

I think it is very useful for the students and professionals for the revision purpose! Check it out!

http://www.ias-plus.com/2011/02/ias-2-inventories/