Under IAS 18, which of the following is an example of retention of significant risks and rewards by the seller?
A)The buyer has no right to rescind the purchase.
B)The seller is under no obligation for satisfactory performance not covered by normal warranties.
C)Goods are sold subject to installation, but installation is not a significant part of the contract and has not yet been completed.
D)Receipt of revenue by the seller is contingent on the buyer generating revenue through its sale of the goods.

Question

Quizplus · Accepted Answer

Retention of significant risks and rewards by the seller means that the seller still bears significant risks or rewards associated with ownership of the goods sold even if they have transferred the ownership to the buyer. In option D, receipt of revenue by the seller is contingent on the buyer generating revenue through its sale of the goods. This means that the seller has retained significant risks and rewards, as the revenue received by the seller is dependent on the buyer's ability to generate revenue through the sale of goods. Options A, B and C do not demonstrate retention of significant risks and rewards by the seller.

Under IAS 18, Which of the Following Is an Example