Oriole Company sells 455 units for $290 each to Sheffield Inc. for cash. Oriole allows Sheffield to return any unused product within 30 days and receive a full refund. The cost of each product is $174. To determine the transaction price, Oriole decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the most likely amount. Using the most likely amount, Oriole estimates that ten (10) units will be returned, the costs of recovering the units will be immaterial, and the returned units are expected to be resold at a profit. What amount of refund liability should Oriole record at the time of sale? O $1740 O $2900 O $1160 O $0
Oriole Company sells 455 units for $290 each to Sheffield Inc. for cash. Oriole allows Sheffield to return any unused product within 30 days and receive a full refund. The cost of each product is $174. To determine the transaction price, Oriole decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the most likely amount. Using the most likely amount, Oriole estimates that ten (10) units will be returned, the costs of recovering the units will be immaterial, and the returned units are expected to be resold at a profit. What amount of refund liability should Oriole record at the time of sale? O $1740 O $2900 O $1160 O $0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Oriole Company sells 455 units for $290 each to Sheffield Inc. for cash. Oriole allows Sheffield to return any unused product within 30
days and receive a full refund. The cost of each product is $174. To determine the transaction price, Oriole decides that the approach
that is most predictive of the amount of consideration to which it will be entitled is the most likely amount. Using the most likely
amount, Oriole estimates that ten (10) units will be returned, the costs of recovering the units will be immaterial, and the returned
units are expected to be resold at a profit. What amount of refund liability should Oriole record at the time of sale?
$1740
O $2900
$1160
O $0
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