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Point 1: Company C is in the business of marketing clinical/medical engineering devices and has been successful at winning company Z as a customer. Representatives working for company C go to medical practitioners and present the newest models of company Z`s clinical / medical engineering devices. The representatives of company C offer these devices to the medical practitioners for sale. Company C has some discretion in negotiating the price with these end customers: company C may add as much as 10% or offer the devices at 10% less of the price recommended by Z - as company C sees fit. Whichever price company C negotiates with the end customer, it will get 10% of the final sales price.
Point 2: According to the sales contract company Z is responsible for delivering the proper, flawless device. Company Z also bears the risk involved in storage and delivery of the devices.
Point 3: After signing the contract, the end customer will first pay the negotiated price to company C. C will then forward 90% of that amount to company Z. Only after Z received 90% of the price, Z will deliver the device to the end customer.
Question 1: Explain if and why company C recognises the gross or net inflows as revenue?
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