Revenue should not be recognized if the buyer's obligation to pay the seller is contingent on the resale of the product.

Question

Quizplus · Accepted Answer

Revenue recognition criteria require that revenue should only be recognized when it is probable that the future economic benefits will flow to the entity and these benefits can be measured reliably. If the buyer's obligation to pay is contingent on resale, the seller cannot be sure the economic benefits will flow to them, thus revenue should not be recognized until this contingency is resolved.

Revenue Should Not Be Recognized If the Buyer's Obligation to Pay