The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming
A)the contract is entered into at the same time as when control over the goods is passed to
The customer.
B)the underlying goods or services are valued under the residual value method.
C)the completed contract method is used.
D)the percentage-of-completion method is used.

Question

Quizplus · Accepted Answer

The contract-based approach recognizes revenue when the performance obligation is satisfied, which is typically when control over the goods is passed to the customer. The earnings approach recognizes revenue when it is earned, which is also typically when control over the goods is passed to the customer. Therefore, the journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming the contract is entered into at the same time as when control over the goods is passed to the customer.

The Journal Entries to Recognize the Revenue from a Consignment