In the vast world of online shopping, Amazon stands out as a giant, offering a wide array of products for purchase. From electronics to groceries, and even fishing gear, Amazon has become a go-to destination for many consumers, including Richard Miller. In this article, we will explore the scenario where Richard Miller purchases a fishing pole through Amazon, delving into the details of the transaction and its implications.
The fishing pole that Richard Miller decides to purchase comes with a hefty price tag of $50,000. This indicates that Richard is not just a casual angler, but someone who takes their fishing hobby or profession very seriously. The high cost of the fishing pole suggests that it is likely a top-of-the-line, premium product, possibly made of high-quality materials and designed for optimal performance.
As Richard proceeds with the purchase on Amazon, he navigates through the online platform, adding the fishing pole to his cart and completing the transaction. The convenience of online shopping allows him to make this significant purchase from the comfort of his own home, without the need to visit a physical store.
However, the story does not end there. A crucial aspect of this transaction is the shipping and delivery of the goods. In this case, the fishing pole is shipped on December 27, FOB destination. FOB, which stands for "Free On Board," indicates the point at which the seller relinquishes ownership of the goods to the buyer. In this scenario, the seller retains ownership of the fishing pole until it reaches its destination, which is Richard Miller in this case.
Despite the shipping date of December 27, the fishing pole is set to be received by Richard on January 3. This delay in delivery raises questions about the timing of revenue recognition and inventory valuation. Since the goods are not in Richard's possession by the end of the accounting period, December 31, he cannot record them as part of his inventory or revenue for that period.
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