EITF Issue No. 02-16 “Accounting by a Customer (Including a Reseller) for Certain Considerat

EITF Issue No. 02-16 “Accounting by a Customer (Including a Reseller) for Certain Considerat

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EITF ABSTRACTS Issue No. 02-16 Title: Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor Dates Discussed: September 11–12, 2002; November 21, 2002; January 23, 2003; March 20, 2003 References: FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements FASB Statement No. 5, Accounting for Contingencies FASB Statement No. 116, Accounting for Contributions Received and Contributions Made FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements of Business Enterprises FASB Concepts Statement No. 6, Elements of Financial Statements APB Opinion No. 20, Accounting Changes APB Opinion No. 29, Accounting for Nonmonetary Transactions AICPA Audit and Accounting Guide, Agricultural Producers and Agricultural Cooperatives International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance ISSUE 1. Issue No. 01-9, "Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)," addresses the accounting by a vendor 1 for consideration given to a customer, including both a reseller of the vendor's products and an entity that purchases the vendor's products from a reseller. That Issue provided accounting guidance on how a vendor should characterize consideration given to a customer and when to recognize and how to measure that consideration in its income statement. 1 Terms defined in Exhibit 02-16B, the glossary, are set forth in boldface type the first time they appear. Copyright © 2003, Financial Accounting Standards Board Not for redistribution Page 1
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2. Questions have arisen regarding how a reseller of a vendor's products should account for cash consideration (as that term is defined in Issue 01-9) received from a vendor. 3. The issues are: Issue 1—The circumstances under which cash consideration received from a vendor by a reseller should be considered (a) an adjustment of the prices of the vendor's products or services and, therefore, characterized as a reduction of cost of sales when recognized in the reseller's income statement, (b) an adjustment to a cost incurred by the reseller and, therefore, characterized as a reduction of that cost when recognized in the reseller's income statement, or (c) a payment for assets or services delivered to the vendor and, therefore, characterized as revenue when recognized in the reseller's income statement Issue 2—If a vendor offers a customer a rebate or refund of a specified amount of cash consideration that is payable only if the customer completes a specified cumulative level of purchases or remains a customer for a specified time period, when the customer should recognize the rebate and how the customer should measure the amount of the offer Issue 3—Under what circumstances up-front nonrefundable cash consideration given by a vendor to a customer should be recognized immediately in the customer's
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This note was uploaded on 10/28/2008 for the course ACCT 304 taught by Professor Ed during the Spring '08 term at Brookdale.

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EITF Issue No. 02-16 “Accounting by a Customer (Including a Reseller) for Certain Considerat

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