Consignment arrangement
Indicators include supplier control until sale to a final customer, an ability to require return or transfer to another dealer, and the dealer not having an unconditional obligation to pay, though no single indicator is decisive in every case. Apply IFRS 15’s control analysis to determine when the supplier recognises revenue. Physical delivery to the dealer is not necessarily the transfer of control.
Worked example
A supplier places products with a dealer who can return unsold items and pays only when a final customer buys them. If the supplier retains control until that sale, it recognises revenue at the later sale rather than on delivery to the dealer.
Common mistake
Assuming physical shipment to a dealer automatically establishes a sale, or using consignment language without analysing actual contractual rights.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |