ADMN 3221H Chapter Notes - Chapter 6: Revenue Recognition, Barter, Consignor

• School: Trent University
• Department: Business Administration
• Course: ADMN 3221H
• Professor: Ebadul Islam

Document Summary

Implicit obligations not specifically outlined in the sales contract (i. e. constructive obligation) may also be enforced under common or other law. Sales transactions: revenue/sales is described as, inflow of economic benefits (e. g. cash, receivables, etc, arising from ordinary activities, there are two approaches to recognizing sales/revenues, asset-liability approach (contract based approach, earnings approach. Right of return: sales with rights of return have long been a challenge in the area of revenue recognition. Repurchase agreements: allows companies to transfer an asset to a customer but have an obligation or right to repurchase the asset at a later date. Principal-agent relationships: principals obligation = provide goods or services to the customer, agents obligation = arrange for the principal to provide goods or services to the customer. In these situations, amounts collected on behalf of the principal are not revenue of the agent: usually commission is paid and the agent would record this as their revenue.