CFA Practice Question

CFA Practice Question

Each of the following are conditions that must be met if revenue is going to be recognized at the time of sale except
A. seller has no significant obligations for future performance to directly effect resale of product.
B. product return periods are less than or equal to 30 days from the time of sale.
C. price is substantially fixed or determinable at the sale date, and buyer pays the seller or is obligated to pay the seller (not contingent on resale).
Explanation: Revenue can be recognized at the time of sale as long as the product returns are reasonably estimated as well as several other conditions existing. There is no definitive number of days that make the recognition possible.

User Contributed Comments 1

User Comment
MrsP Should have guessed that that an exact number of days in one of the answers was going to be incorrect.
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