ACCOUNTING FOR SPECIAL
TRANSACTIONS
(Advanced Accounting 1)
LECTURE AID
2018
ZEUS VERNON B. MILLAN
Chapter 9
Consignment Sales
Related standard: PFRS 15 Revenue from Contracts with
Customers
Learning Competencies
• Define a consignment arrangement.
• Apply the principles of PFRS 15 in recognizing
revenue from a consignment arrangement.
ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:
MILLAN)
Branch and Agency distinguished
ACCOUNTING FOR SPECIAL
TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Consignment arrangements
• Under a consignment arrangement, an entity (called the ‘consignor’) delivers goods to
another party (called the ‘consignee’) who undertakes to sell the goods to end
customers on behalf of the consignor.
• The consignor recognizes revenue only when the consignee sells the consigned goods
to end customers.
• Consigned goods are included in the consignor’s inventory until they are sold to
the end customer.
• Freight and other incidental costs of transferring consigned goods to the consignee
(e.g., transportation and insurance) form part of the cost of the consigned
goods.
ACCOUNTING FOR SPECIAL
TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
Revenue recognition
• When the consigned goods are sold to end customers,
o The consignor recognizes revenue at the gross amount of
consideration, i.e., the sale price agreed with the consignee.
o The consignee recognizes revenue at the commission or fee to which
it is entitled.
ACCOUNTING FOR SPECIAL
TRANSACTIONS (Advanced
Accounting 1) - (by: MILLAN)
APPLICATION OF CONCEPTS
PROBLEM 2: FOR CLASSROOM DISCUSSION
ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:
MILLAN)
OPEN FORUM
QUESTIONS????
REACTIONS!!!!!
ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:
MILLAN)
END
ACCOUNTING FOR SPECIAL TRANSACTIONS (Advanced Accounting 1) - (by:
MILLAN)
