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CHAPTER 12 - RR REVENUES From Contracts With Customers: Jan 02, 20x5
CHAPTER 12 - RR REVENUES From Contracts With Customers: Jan 02, 20x5
Note: Some Companies record the returned asset in a separate account from inventory to provide
transparency.
3.) If CPF is unable to estimate returns, it defers recognition of revenue until the return period expires on
* Because these goods were damaged and might not be sold at a profit, they likely will be separated fr
A loss may be subsequently recognized if this inventory is sold or disposed of at an amount lower t
June 7, 20x5:
Delivery Expense 48.00
Cash 48.00
To record the delivery cost
In this problem, it appears that the above criteria were met, and therefore revenue recognition
should be permitted at the time the contract is signed.
3.) MM Inc. records interest and retirement of its liability to RR Company on December 31, 20x9, as follow
Interest Expense 26,400.00
Liability to RR Company 26,400.00
(240,000 + 24,000) x 10%
r customer.
e revenue recognition
MM makes
The estimated product return allowances should then be recorded at the time of sale as well.
However, if the seller is unable to make a reasonable estimate of the amount of future product return
seller should wait to record revenue until the loss can be estimated or the return privilege expires.
Put Option
If an entity has an obligation to repurchase the asset at the customer’s request (a put option) at a price
than the original selling price of the asset
(b) Sale with a right of return - if the customer does not have the significant economic incentive to exe
ller may or may not be able
d the sales revenue at the
sale as well.
uture product returns, the
privilege expires.