I have a question on how to handle the Accounting for revenue recognition related to Dealer agreements in the State of Minnesota. My company recognized revenue upon shipment of goods as we always do unless it's a consignment situation.
It has come to my attention that in the State of Minnesota if the Dealer agreement is terminated, the Manufacturer (my company) must purchase back all goods from the Dealer sold in the last 24 months. Does some sort of provision need to be set up for goods sold in Minnesota or are we fine continuing as we have been? To me, the most conservative way to handle would be to not recognize the revenue until sold to a 3rd party or 24 months elapses whichever is first.
Thank you for any guidance.
It has come to my attention that in the State of Minnesota if the Dealer agreement is terminated, the Manufacturer (my company) must purchase back all goods from the Dealer sold in the last 24 months. Does some sort of provision need to be set up for goods sold in Minnesota or are we fine continuing as we have been? To me, the most conservative way to handle would be to not recognize the revenue until sold to a 3rd party or 24 months elapses whichever is first.
Thank you for any guidance.
