IFRS 15Chapter 11Lesson 1
Sales with a right of return and warranties
Step 1 of 8Learning objectives
Go deeper+3 deeper insights · +1 calculation · +1 point of attention
A sale with a right of return gives rise to revenue only for the goods not expected to be returned: the rest becomes a refund liability, and the entity recognises an asset for the products it will recover. A warranty is a performance obligation only if the customer can buy it separately or if it provides a service in addition to the assurance of compliance; otherwise it falls under IAS 37.
30 minNot started
Learning objectives
- Calculate the revenue, the refund liability and the asset for the right to recover products of a sale with a right of return.
- Record the sale and then the remeasurement of expected returns at the reporting date.
- Distinguish a return, an exchange and the return of a defective product.
- Classify a warranty (assurance of compliance under IAS 37 or a distinct service) and allocate the price between the good and the service-type warranty.