Last update 03/02/2020
B77 When an entity delivers a product to another party (such as a dealer or a distributor) for sale to end customers, the entity shall evaluate whether that other party has obtained control of the product at that point in time. A product that has been delivered to another party may be held in a consignment arrangement if that other party has not obtained control of the product. Accordingly, an entity shall not recognise revenue upon delivery of a product to another party if the delivered product is held on consignment.
B78 Indicators that an arrangement is a consignment arrangement include, but are not limited to, the following:
- the product is controlled by the entity until a specified event occurs, such as the sale of the product to a customer of the dealer or until a specified period expires;
- the entity is able to require the return of the product or transfer the product to a third party (such as another dealer); and
- the dealer does not have an unconditional obligation to pay for the product (although it might be required to pay a deposit).
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