01-15-2006, 03:31 PM
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Hi Everyone, I'm from Singapore and my lecturer give me this question to try out at home. But I am not sure the approach to it. Can anyone help me? Thanks! The question goes like this -
A manufacturer of motorcycles, Riley Ltd (RL), supplies motorcycles to a dealer, Autocycle Trading Pte Ltd(ATPL) on the following terms
1. ATPL is responsible for insuring the motorcycles on display in the showroom
2. When a motorcycle is sold to a customer, ATPL has to pay RL the factory price of the motorcycle when it was first supplied.
3. ATPL can only return the motorcycles to RL on the payment of the fixed penalty charge of 10% of the cost of motorcycle.
4. ATPL has to pay the factory price for the motorcycles if they remain unsold within a four month period
5. RL cannot demain the return of the motorcycles from ATPL.
a) Identify the possible points of revenue recognition concerning motorcycle sales in RL's case. What is the most appropriate point to recognize revenue?
b) Discuss the reasoning for your answer.
Hi Everyone, I'm from Singapore and my lecturer give me this question to try out at home. But I am not sure the approach to it. Can anyone help me? Thanks! The question goes like this -
A manufacturer of motorcycles, Riley Ltd (RL), supplies motorcycles to a dealer, Autocycle Trading Pte Ltd(ATPL) on the following terms
1. ATPL is responsible for insuring the motorcycles on display in the showroom
2. When a motorcycle is sold to a customer, ATPL has to pay RL the factory price of the motorcycle when it was first supplied.
3. ATPL can only return the motorcycles to RL on the payment of the fixed penalty charge of 10% of the cost of motorcycle.
4. ATPL has to pay the factory price for the motorcycles if they remain unsold within a four month period
5. RL cannot demain the return of the motorcycles from ATPL.
a) Identify the possible points of revenue recognition concerning motorcycle sales in RL's case. What is the most appropriate point to recognize revenue?
b) Discuss the reasoning for your answer.