Question based on revenue recognition principle

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Reference no: EM1312912

Theory question based on revenue recognition principle.

Many companies sell products allowing their customers the right to return merchandise if they are not satisfied. Because the return of merchandise can retroactively negate the benefits of having made a sale, the seller must meet certain criteria before revenue is recognized in situations when the right of return exists. SFAS No.48,Revenue recognition when right of return exists, lists the criteria, the most criteria of which is that the seller must be able to make reliable estimates of future returns.

Why do the two revenue recognition policies differ?

Reference no: EM1312912

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