Asked by Faustine Hudson on May 26, 2024
Verified
In the case of sales with delayed delivery
A) the seller should always recognize revenue before the products are delivered to the customer.
B) the goods belong to the customer.
C) if the buyer requests in the sales agreement that the transaction be on a "bill and hold" basis and has a substantial business reason for doing so,the seller may recognize revenue when production of the goods is complete.
D) recognized under the installment sales methoD.
Bill And Hold Basis
An arrangement where a seller bills a customer for products but holds onto the inventory until it is actually needed or requested by the customer.
Sales Agreement
A detailed contract which outlines the terms of sale of goods or services between two parties.
- Identify the differences in revenue recognition approaches and their application in diverse contexts, including installment sales, consignments, and service-related income.
- Become familiar with the requirements for revenue recognition within U.S. GAAP and IFRS frameworks.
Verified Answer
RK
Rohit KumarMay 31, 2024
Final Answer :
C
Explanation :
If the buyer requests in the sales agreement that the transaction be on a "bill and hold" basis and has a substantial business reason for doing so, the seller may recognize revenue when production of the goods is complete. This means that revenue recognition can be delayed until delivery is made to the customer.
Learning Objectives
- Identify the differences in revenue recognition approaches and their application in diverse contexts, including installment sales, consignments, and service-related income.
- Become familiar with the requirements for revenue recognition within U.S. GAAP and IFRS frameworks.
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