Credit invoices and reliable measurement of cost

I can see where the question arises from. You know you’ll be issued a credit invoice (or you’re fairly certain it will happen) and you question whether you should recognize the asset. Remember here that the conditions for recognizing an asset (as also referenced in IAS 16) are as follows: (1) it is probable that future economic benefits associated with the item will flow to the entity and (2) the cost of the item can be measured reliably. 

Whereas we’ve determined that future economic benefit will flow to the entity from the asset, it’s the cost I want to focus right now. Costs included within the acquisition cost is one matter, however not the topic of this post. The question I am trying to answer is “can I reliably measure the cost if there’s a chance I will receive a credit invoice for the acquisition?” The simple answer is “yes”.

I’ll explain:

  1. You will know the cost in the first place by using the initial price. Based on the presumption that you may not receive this credit invoice you can in fact reliable measure the cost.
  2. However, if you’re certain you will receive the credit, you will no doubt also know the amount for which the credit invoice shall be. You ought to know it, if you’re arguing over it.

So in short, you can reliably measure the cost even if the credit invoice is going to be issued. One way or the other, it’s the details you’re arguing about and those details, if you’re arguing, are known to you. Or at least you can estimate them.