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Explain how the company should account for this transaction

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Question - A company enters into 10,000 contracts with customers, all on the same date. These contracts have very similar characteristics and therefore (as a practical expedient) the company decides to apply the requirements of IFRS15 to the portfolio of contracts rather than accounting for each contract individually. Each contract involves the sale of a single product at a price of £30. Customers pay for the product when it is delivered and obtain control of the product on the delivery date. The terms of the contract entitle customers to return the product within 60 days and receive a full refund of the purchase price. Based on previous experience, the company estimates that 4% of customers will exercise their right of return. Explain how the company should account for this transaction?

Reference no: EM132780776

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