Valuation of Inventories Flashcards
1
Q
FOB shipping point
A
Title is passed when the the goods are delivered to the common carrier. This allows ownership to be determined when goods are in transit at the end of a fiscal period. Revenue may be recognized at the point of shipping with FOB shipping point.
2
Q
FOB destination
A
Title is passed when the goods are received from the common carrier. This allows ownership to be determined when goods are in transit at the end of a fiscal period. Revenue cannot be recognized when shipped and must be recognized when the buyer receives the goods.
3
Q
Sale with right of return
A
Revenue recognition should be delayed until the right of return has expired.
