Premiums and Discounts

Premiums and Discounts

 

alterations in listed wholesale prices that are based on changes made in quality features of the articles being sold. These price changes are intended to provide enterprises with economic incentives toward improving product quality, as well as to eliminate multiple price listings. Premiums also compensate the producer for economically sound additional expenditures to improve product quality.

Premiums and discounts are used when the consumer has demanded basic changes in an article that has an already set wholesale price, when the component parts of the article are to be altered, when the actual quality of a product differs from the standard quality cited in the price list, and when state certification of product quality is given. As a rule, a temporary premium is established for products of the highest quality and lasts until expiration of the state seal of quality. A price discount is similarly offered on products of secondary quality. Price changes may also be based on improved reliability and durability in machines and equipment and may specially apply to export products. Discounts may be introduced on obsolete articles that are being withdrawn from production and on products temporarily being produced at below standard requirements, as authorized by standardization agencies. Premiums and discounts on wholesale prices based on product quality are also used extensively in foreign countries and in international trade.

IU. V. IAKOVETS

References in periodicals archive ?
Exhibit 1 summarizes the options for elections to amortize premiums and discounts.
One issue, according to Compton, "is the lack of consistent specific guidance on the mechanics of dealing with premiums and discounts on financial instruments.