Employees at your compabny disagree about the accounting for sales returns. The sales manager believes thta granting more generous return provisions can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return provisions might lead to non GAAP revenue recognition. The company CFO would like you to research the issue to provide an authorative answer.
Intructions
Prepare responses to the following .Provide codification for your response( paragraph citations)
(a) What is the authoritative literature addressing revenue recognition when right of return exists?
(b) What is mean by "Right of return"? " Bill and hold"?
(c) Describe the accounting when there is a right of return.
(d) When goods are sold on a bill- and hold basis, what conditons must be meet to recognize revenue upon receipt of th orther?