QUESTION 21 On 1 January 2018, a vendor (a retailer) sells 100 identical goods to different customers, at a sales price of $ 100 (total $ 10,000). The cost of each good is $ 60. Revenue is recognised at the point at which a customer buys one of the goods, and customers have a right to return the good for a period of 30 days from the original purchase, in return for a full refund. The right of return gives rise to variable consideration. Based on substantial historic experience with the good, and on future expectations, the vendor estimates that three of the goods will be returned. The amount and quality of evidence available means that the vendor is able to conclude that it is highly probable that there will not be a significant reversal of revenue if it recognizes revenue attributable to the 97 goods that it does not expect to be returned. Explain the revenue recognition.