CONSIGNMENT SALES CONSIGNMENT SALES transfers the POSSESSION not the OWNERSHIP Arrangement between • Entity that delivers goods CONSIGNOR Inventory CONSIGNEE CONSIGNED GOODS • Party who undertakes to sell the goods to END CUSTOMERS on behalf of the consignor. Memo Entries Form part of the Cost of CONSIGNED GOODS Freight and other incidental costs If the CONSIGNEE shoulders these costs Treated as Treated as EXPENSE Receivable from CONSIGNOR Reimbursable Repair Costs Not Reimbursable EXPENSE Based on SALES EXPENSE In case of RECEIVABLE • When the related goods are sold to end customers, derecognize receivable then recognize CE INCOME COMMISSION • Deducted from the amounts remitted to the CONSIGNOR Based on MARKUP Advanced Commission • Not Cost of Inventory COMMISSION EXPENSE GROSS AMOUNT REVENUE RECOGNITION COMMISSION / FEE • Recognizes revenue ONLY when CONSIGNEE sells the CONSIGNED GOODS to the END CUSTOMERS PRINCIPAL • Controls the goods or services BEFORE the good or service is transferred to the customer. AGENT • Arranges the provision of goods or services by another company By: RABALANA