100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary ICAEW ACA Corporate Reporting - Revenue, Ethics and Performance Analysis checklists £7.49   Add to cart

Summary

Summary ICAEW ACA Corporate Reporting - Revenue, Ethics and Performance Analysis checklists

 15 views  0 purchase

All you need to know re: the Revenue, Ethics and Performance Analysis topics within the Corporate Reporting Advanced Level exam. Easy to use checklists perfect for the open book exam. The hard work has already been done for you!

Preview 1 out of 5  pages

  • Yes
  • October 15, 2021
  • 5
  • 2021/2022
  • Summary
book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:
All documents for this subject (98)
avatar-seller
PASSACA
[2] Revenue - specific considerations




EXAMPLE 1 SALE WITH RIGHT OF RETURN
"Co A operates a number of high-end handbag outlets. On 28-Jan-X9, it sells 50
identical bags to different customers for £850 each. The bags cost £400 each. The
customers have 28 days in which they can return purchases in exchange for a full
refund and based on past experience, Co A expects a returns level of 6%. In the
February sale the selling price of the bags will be reduced to 50% of the original price
from that date. How would Co A account for the sale of the bags."
- Co A expects 3 bags (6% x 50) to be returned. Therefore, on 28-Jan-X9 revenue is
recognised in relation to 47 (50 - 3) bags, giving a total of £39,950 (47 x £850).
- A refund liability of £2,550 (3 x £850) is recognised.
- The cost of 47 bags of £18,800 (47 x £400) is transferred to COS.
- The remaining 3 bags are recognised as an asset (the right to recover the bags) at cost
£1,200 (3 x £400). The 'right to recover' asset is measured at the original cost of the
bags that are expected to be returned because, even in the February sale, they are
capable of being sold for £425 (50% x £850) i.e., more than cost.
- The required journal entries are:
DR Bank (50 x £850) £42,500
CR Revenue £39,950
CR Refund liability £2,250
To recognised the sale of bags and expectation that 6% will be returned.
DR Asset (right to recover inventory) £1,200
DR COS (47 x £400) £18,800
CR Asset (inventory) (50 x £400) £20,000




Guarantee of replacement device
This is a multi-element sale and it needs to be determined whether there is a
market price for the guarantee element - which would require separate
recognition.
- As no revenue is recognised at 30-Jun-X4 the adjustment for guarantees, if
any, would be made at the YE.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller PASSACA. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £7.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

62491 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£7.49
  • (0)
  Add to cart