In: Accounting
Employees at Cutting Edge disagree about the accounting for sales returns. The sales manager believes that granting more generous returns policy can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return provisions might lead to non-GAAP revenue recognition. The company CFO would like you to research the issue to provide an authoritative answer.
Required: Prepare a research report using authoritative literature addressing revenue recognition when right of return exits and describe the accounting when there is a right of return. Include what is meant by “right of return” in your report. Your research report should include a discussion of the relevant FASB Codification section (s) that you used in developing report. Summarize what you discovered in your research in your own words – do not simply quote from the Codification. The research report should be no longer than two pages in length, single-spaced, and contain proper citations following APA Style format.