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Boomerang Computer Company Sells Computers with an Unconditional Right to Return

Question 48

Multiple Choice

Boomerang Computer Company sells computers with an unconditional right to return the computer if the customer is not satisfied. Boomerang has a long history selling these computers under this returns policy, and can provide precise estimates of the amount of returns associated with each sale. Boomerang most likely should recognize revenue:


A) When Boomerang delivers a computer to a customer.
B) When Boomerang receives cash from the customer.
C) When a customer returns a computer.
D) Never, because the right of return is unconditional.Returns can be estimated at delivery, so an allowance can be created and revenue recognized at that point.

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