The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming
A) the contract is entered into at the same time as when control over the goods is passed to the customer.
B) the underlying goods or services are valued under the residual value method.
C) the completed contract method is used.
D) the percentage-of-completion method is used.

Question

Quizplus · Accepted Answer

The timing and method of recognizing revenue for a consignment sale would be the same under both the earnings and the contract-based approaches as long as the contract is entered into at the same time as when control over the goods is passed to the customer. The valuation method used for the underlying goods or services and the completion method used would not affect the journal entries for revenue recognition.

The Journal Entries to Recognize the Revenue from a Consignment