AFM291 Chapter Notes - Chapter 6: Deliverable, Barter, Income Statement

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Delivery has occurred; seller"s price to the buyer is fixed and determinable: revenues recognized, performance is achieved which means. Risks and rewards are transferred and/or the earnings process is substantially complete, and. Fob shipping point legal title belongs to the buyer when the goods leave the shipping docks. Sometimes a company will sell inventory to a customer but not ship it. Perhaps the customer doesn"t have room in its warehouse in the short-term, or perhaps the customer"s receiving department is on strike. Customer has the right to accept or reject the inventory. Types: trial or evaluation basis; right of return based on subjective criteria; right of return based on seller"s or customer"s objective spcifications: disposition of assets other than inventory. Applies to items that are disposed of through sales that are not part of the normal earnings process e. g. sales of income-producing or capital assets.

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