Boomerang Computer Company Sells Computers with an Unconditional Right to Return

question 84

Multiple Choice

Boomerang Computer Company sells computers with an unconditional right to return the computer if the customer is not satisfied. Boomerang has a long history selling these computers under this returns policy and can provide precise estimates of the amount of returns associated with each sale. Boomerang most likely should recognize revenue:

• A) When Boomerang delivers a computer to a customer, ignoring potential returns.
• B) When Boomerang delivers a computer to a customer, in an amount that is reduced by the expected returns.
• C) When Boomerang receives cash from the customer.
• D) When a customer returns a computer.

---

Definitions:

Mutual Agreement

A common understanding or an arrangement that is accepted by all parties to a transaction or contract.

Mixed Goods-Services

Mixed goods-services refer to transactions that involve a combination of tangible products and intangible services in a single offering to consumers.

Federal Government

is the national government of a federal state, which holds the authority over the entire nation, distinct from state or local governments.

Good Faith

Acting with honesty and sincerity without any intention to deceive or defraud.