The most important criteria related to revenue recognition when the right of return exists is that the amount of future returns can be reasonably estimated.

Question

Quizplus · Accepted Answer

When the right of return exists, revenue cannot be recognized until the potential return of goods is estimated and accounted for in the financial statements. The estimation should be done with a high level of accuracy and reliability to ensure that the financial statements reflect the realizable value of goods sold. Therefore, the amount of future returns must be reasonably estimated for proper revenue recognition.

The Most Important Criteria Related to Revenue Recognition When the Right