BU387 Chapter Notes - Chapter 6: Consignor, Gross Profit, Measurement Uncertainty
Document Summary
Understanding the nature of sales transactions from a business perspective. Business perspective: what(cid:859)s (cid:271)ei(cid:374)g gi(cid:448)e(cid:374) up i(cid:374) the tra(cid:374)sa(cid:272)tio(cid:374)s a(cid:374)d (cid:449)hat(cid:859)s (cid:271)ei(cid:374)g re(cid:272)ei(cid:448)ed. When to recognize transaction and how to measure/present it. Selling transactions involves entity transferring g/s (deliverables) to customers. Goods: tangible assets definite point in time when control over goods or item being sold passes to buyer. Control: entity has access to benefits provided by asset where others do not. Coincides with transfer of risks and rewards as indicated by possession and legal title. Services: not tangible assets and concepts of possession and legal title are irrelevant. May be completed in one period but often span more than one period. Added complexity of how much, if any, revenue is earned in any given period. Multiple deliverables/bundled sales: possession and legal title to goods might pass before, after, or during the time when services are rendered. Reciprocal: entity gives something up and receives something in return.
