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As per IFRS 15, the variable consideration will not be added to the transaction price if it is highly probable that there will not be a significant reversal in cumulative revenue recognized, once the uncertainty is resolved.
My question is if for example an entity sold 50 products, but it is highly probable that only 48 of them will not be returned.
Now, for the 2 products, since the inventory has been transferred and consideration received and revenue cannot be recognized, how will those be accounted for? What will the journal entries be?Not really a scenario of variable consideration – which means that the selling price per unit will very dependant on the volume of sales to the customer.
But for your scenario:
On ‘sale’ of 2 products:
Dr Cash Cr Deferred income / contract liability
At SFP date 2 items will be included in year end inventory (though I think separately disclosed):
Dr Inventory Cr Cost of sales
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