Question: In September 2018 Badger Corp shipped a large quantity of

In September 2018, Badger Corp. shipped a large quantity of merchandise to a third-party warehouse for storage.
The merchandise is to be shipped to customers in October 2018. Normally, Badger Corp. ships merchandise directly to its customers, but because of pending labour problems at Badger's facility the goods were shipped to the third-party warehouse.
(The customers were unwilling to accept the merchandise in advance.) The third party warehouse has assumed responsibility for shipping the merchandise to the customers when required and is responsible for any loss or damage. Badger Corp. continues to be responsible for collecting amounts from customers and providing any required customer support. Badger Corp. normally recognizes revenue on shipment to customers. Badger Corp. has agreed to pay the third party warehouse $50,000 for its services.

When should Badger recognize the revenue for the goods shipped to the third party warehouse? Explain your answer.

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  • CreatedFebruary 26, 2015
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