Page 159 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Revenue

2.3 Sale or return (consignment inventory)
A sale is made where the customer can return the goods to the supplier if the
customer cannot sell the product.

(1) Manufacturer 3rd party
sells car to Customer

Supplier dealer Customer
(Car manufacturer) (Dealership)
(3) If no sale by the
dealer, the car
can be returned
to manufacturer (2) Cars are sold by
dealer to 3rd

party

Have the risks and rewards transferred from manufacturer to dealer?

Must consider whether:

 dealer can return with no penalties

 price paid by dealer determined at time of delivery

 dealer can use car with no penalties

 insurance costs borne by dealer.

151