Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 74: E2-10b

Answer

This entry is inappropriate because it violates the revenue recognition criteria.

Work Step by Step

According to the revenue recognition criteria, revenue should not be recognized until it is realized or realizable, and this transaction recognizes it before the inventory is sold.
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