AuctionCo.com sells used products collected from different suppliers. Assume a customer ordered a used bicycle through AuctionCo.com
Question:
AuctionCo.com sells used products collected from different suppliers. Assume a customer ordered a used bicycle through AuctionCo.com for $30. The cost of this bicycle is $20 to AuctionCo.com. The bicycle will be shipped to the customer by the original bicycle owner.
Required:
1. Assume AuctionCo.com takes control of this used bicycle before sale. Under this assumption, how much revenue would the company recognize?
2. Assume AuctionCo.com never takes control of this used bicycle before sale. Under this assumption, how much revenue would the company recognize?
3. Which assumption do you think is more appropriate for the AuctionCo.com case?
Assumption that AuctionCo.com is the principal.
Assumption that AuctionCo.com is acting as an agent.
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson