Question

GAAP specifies that for a seller to record revenue at time of sale when right of return exists the following conditions must be met except:(A) The seller's price to the buyer is substantially fixed or determinable at the date of sale.(B) The buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product. (C) The buyer's obligation to the seller changes in the event of theft or physical destruction or damage of the product.(D) The amount of future returns can be reasonably estimated.

Answer 1

Answer:

The correct answer is (C) The buyer's obligation to the seller changes in the event of theft or physical destruction or damage of the product.

Explanation:

Unlike the loss incurred models contained in the existing US GAAP, the CECL model does not specify a threshold for the recognition of the provision for impairment. Moreover, the entity will recognize its estimate of expected credit losses for financial assets at the end of the reporting period. Credit impairment will be recognized as a provision - or against asset - rather than as a direct punishment of the base of the amortized cost of the financial asset. However, the carrying amount of the financial asset deemed uncollectible will be written off in a manner consistent with existing US GAAP.