If a company sells its product but gives the buyer the right to return the product,IASB (2011)Revenue from Contracts with Customers requires revenue from the sales transaction to be recognised at the time of sale.

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According to IASB (2011) Revenue from Contracts with Customers, revenue from a sales transaction where the buyer has the right to return the product should only be recognised once it can be reasonably assured that the buyer will not exercise their right to return, which is typically after the return period has expired. Therefore, revenue cannot be recognised at the time of sale.

If a Company Sells Its Product but Gives the Buyer