The FASB concluded that if a company sells its product but gives the buyer the right to return the product, revenue from the sales transaction shall be recognized at the time of sale only if all of six conditions have been met. Which of the following is not one of these six conditions?
A) The amount of future returns can be reasonably estimated.
B) The seller's price is substantially fixed or determinable at time of sale.
C) The buyer's obligation to the seller would not be changed in the event of theft or damage of the product.
D) The buyer is obligated to pay the seller upon resale of the product.

Question

Quizplus · Accepted Answer

The condition that the buyer is obligated to pay the seller upon resale of the product is not one of the six conditions for recognizing revenue at the time of sale when there is a right of return. The conditions focus on estimations of returns, price determinability, and the seller's and buyer's rights and obligations at the time of the original sale, not upon the resale of the product.

The FASB Concluded That If a Company Sells Its Product