Page 183 - F2 Integrated Workbook STUDENT 2019

Revenue from contracts with customers

1.7.2 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 the (2) Cars are sold by
manufacturer dealer to 3rd

party

Has the control transferred from manufacturer to dealer at the point of the sale?

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.

 Dealer has no obligation to pay the manufacturer until sale to third party occurs

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