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Revenue recognition - drop ship products

Asked on Oct. 25, 2016

Can revenue be recognized upon sale for resellers of product when delivery of product is directly from the manufacturer to the end user and the reseller lists FOB origin on its invoice? The customers cannot return goods. If they are damaged the reseller will have the manufacturer replace the merchandise.

Answers

Wayne Spivak's headshot
Wayne Spivak President & CFO • Oct. 26, 2016

The revenue should be recognized (FOB Origin) the day you/your Manufacturer ships, not the day you process the order.

FOB Destination would be the day the customer receives the merchandise.

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