question archive In its annual report, American Eagle Outfitters states that its “e-commerce operation records revenue upon the estimated customer receipt date of the merchandise
In its annual report, American Eagle Outfitters states that its “e-commerce operation records revenue upon the estimated customer receipt date of the merchandise
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In its annual report, American Eagle Outfitters states that its “e-commerce operation records revenue upon the estimated customer receipt date of the merchandise.”
1. Is this FOB shipping point or FOB destination?
2. If American Eagle were to change to the other terms of shipment, would it report its Sales Revenues earlier or later?
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1) Answer : FOB destination
If the shipping terms are FOB shipping point, seller will recognize revenue when the goods leave the seller's shipping dock.
If the shipping terms are FOB destination, seller will recognize revenue when the goods arrive at the buyer's receiving dock.
Hence, in the given case revenue has been recognized upon the estimated customer receipt date of merchandise so this is FOB destination.
2) If the American Eagle were to change the shipping terms to FOB shipping point then it would report it's sales revenue earlier. When the goods leave seller's shipping dock.
