You are on page 1of 1

ACC 543

Chapter 15-17

April 10, 2012

Professional Research: FASB Codification a) Six conjunctive conditions of FASB Statement No. 48, Revenue Recognition when Right of Return Exists, b) The general rule is modified if a right of return exists, unless all six conjunctive conditions of FASB Statement No. 48, Revenue Recognition when Right of Return Exists, are met. These six conditions were discussed in Chapter FIN-I C.2.a.iv and Procedure FIN-I 2. For retailers, these conditions are essentially about the ability to estimate future returns in the typical retail sale. c) Since estimating returns is possible in most instances, the general rule of revenue recognition at the time of sale applies. In situations where the retailer cannot estimate the future returns, such as when a new type of product is sold, then revenue is recognized at the termination of the return period (for example, after 30 days). d) The ability to make a reasonable estimate of the amount of future returns depends on many factors and circumstances that will vary from one case to the next. However, the following factors may impair the ability to make a reasonable estimate: 1) The susceptibility of the product to significant external factors, such as technological obsolescence or changes in demand 2) Relatively long periods in which a particular product may be returned 3) Absence of historical experience with similar types of sales of similar products, or inability to apply such experience because of changing circumstances, for example, changes in the selling enterprise's marketing policies or relationships with its customers 4) Absence of a large volume of relatively homogeneous transactions.

IFRS Self-test question 1)A 2)D 3)A 4)C 5)C

Nina(Na ZHANG)_Depaul ID 1314335

Page 1