Question: Learning Objective: 05-06 Understand how variable consideration and other aspects of contracts affect the calculation and allocation of the transaction price. Finerly Corporation sells cosmetics

Learning Objective: 05-06 Understand how variable consideration and other aspects of contracts affect the calculation and allocation of the transaction price.

Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $300,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold.

How much revenue should Finerly recognize upon delivery to its distributors?

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