ACCT 110 Lecture Notes - Lecture 24: Promissory Note, Santa Barbara City College, Return Period
Document Summary
Sales of goods: when the buyer has legal ownership and there is the transfer of both risks and rewards. Generally, a barter transaction (selling a computer for office furniture) is seen as a sale if the transaction has commercial substance. Concessionary terms: terms negotiated by a party to the contract that are more favourable than normal. Examples: discounts, lenient return or payment policy, loosened credit policy, bill and hold, customer acceptance conditions, ongoing or additional services, seller continues to have some involvement. Must try to understand whether it is a normal or abnormal part of how the company does business. Specifies when legal ownership is passed on. Fob shipping point: title passes at the point of shipment. Fob destination: title passes when the asset is delivered to the customer. This is an obligation not stated in contracts but may be enforceable i. e. if a company says they stand by their products 100% they may need a long return period.
