When the right of return exists, revenue can be recognized at the point of sale if the seller can make reliable estimates of future returns.

Question

Quizplus · Accepted Answer

Revenue can be recognized at the point of sale even when a right of return exists, provided the seller can reasonably estimate future returns. This is because the seller can account for the expected returns through a refund liability and an asset for the right to recover returned goods, thus recognizing revenue while also accounting for the expected returns.

When the Right of Return Exists, Revenue Can Be Recognized