27: A.2. Right of Return and Consigned Goods

Question 1

When the right of return exists, the contract consideration is

A. Variable consideration and the contract price exclude the consideration for products expected to be returned or amounts expected to be refunded.
B. The amount the seller expects to be entitled to receive.
C. Provisional and revenue cannot be recognized until the return privilege period has expired.
D. reported as a contract liability.

Answer 1

The correct answer is A

The contract consideration, yes, it’s a variable that means the amount that will be recognized as revenue,e it can change, then we subtract the amount expected to be refunded or returned

for example:-
A company sells 100,000$ of its products
It expects that the customer will return 10,000
then 90,000 = variable, because it can change in the future