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CCR Inc. sells 100 refrigerators for $2,000 each with a $100 mail in rebate. They expect...

CCR Inc. sells 100 refrigerators for $2,000 each with a $100 mail in rebate. They expect 50 of the rebates to be redeemed. How much revenue does CCR recognize at the date of sale?

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Answer #1

In this case, the Company did not need to recognize a provision in the financial statements at the time sending these e-mails. The reason is because there is no past event.

In this case assuming this rebates can also only encashed when the customer will make an another purchase and then only liability for these rebates can be booked. So accounting of rebates will upon redemption and not on the date of issue.

Going from above guidance, the Company should account for 100 refrigerators @2,000 each.

Total revenue that needs to be booked is $200,000.

Accounting of rebates will be done at the time of redemption.

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