RSM221H1 Chapter Notes - Chapter 6: Consignee, Consignor, Profit Margin

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13 Sep 2016
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Nature of sales transactions from a business perspective. Sale of services: multiple deliverables/bundled sales contracts involving both sale of goods and services for one price. Users of statements must be able to see the economics and legalities underlying the business and transactions when looking at the statements. Consideration what the entity receives in return for the provision of goods/services. Arm"s length are between unrelated parties. Assume value of what"s given up = value of what is received. Always assume transaction at arm"s length & is reciprocal. Credit risk when sells on credit risk that customer will not pay. Price risk risk that price of an asset will change. Representational faithfulness concept supports full disclosure of risks and changes in risk, as they affect the entity"s ability to generate future cash flows. Terms are negotiated by a party to the contract that are most favourable than normal.

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