In December 20X1, Ardélie sells 1,000 kitchen robots at a unit price of 400, with a 90-day right of return. At the date of sale, it expects 60 units robots to be returned and recognises the corresponding refund liability. At 31 December 20X1, the reporting date, 20 units robots have been returned and refunded; Ardélie revises its estimate and now expects only 25 units further robots to be returned. Calculate the refund liability at the reporting date and the adjustment to revenue (the asset for the right to recover the products is not dealt with here).
- Unit selling price
- 400
- Returns expected at the date of sale
- 60
- Robots returned and refunded before the reporting date
- 20
- Further returns still expected at the reporting date
- 25