CERTYNEX IFRS ACADEMY

Sorbelle had recognised a refund liability of 15,000 for the expected returns on its November 20X1 sales. At 31 December 20X1, the reporting date, no return has occurred and Sorbelle revises its estimate: the liability required is now only 9,000. How does it account for the difference?

It reduces the refund liability by 6,000 and recognises 6,000 as revenue.

It keeps the liability at 15,000 until the return period expires, and then reverses it in full.

It reduces the refund liability by 6,000 against other income, presented outside revenue.

It reduces the refund liability by 6,000 directly in equity, with no effect on profit or loss for the period.