BMGT 310 Chapter 18: Notes
5 Jun 2016
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Most of the time, based on experience firms can estimate the probability of product return and hence can recognize revenue after deducting the expense associated with returns. However, in some situations product return estimates cannot be made reliably: e. g. Sometimes a company arranges for another company to sell its product under consignment. The consignor transfers the goods to the other company (the consignee) but retains the legal title. If the consignee cannot sell the products within the agreed-upon time, it returns the goods to the consignor. The goods stay in the consignor"s balance sheet until consignee sells them. Hence, the consignee does not record a revenue and related expenses until the title passes to the customer. Boston scientific corporation sells single-use medical devises and some of its products are sold using consignment arrangements. Disclosure of revenue recognition policy-boston scientific corporation.
