Under IFRS 15, when a customer has a right of return, an entity needs to estimate at contract inception the amount of goods that will be returned and recognize revenue for the expected consideration to be received. IFRS 15 introduces a new approach for handling rights of return compared to previous standards (IAS 18 and IAS 11).

Key considerations for sales with a right of return under IFRS 15:

1. Revenue Recognition: An entity recognizes revenue for the transferred products in the amount to which it expects to be entitled, i.e., it needs to estimate the products that will not be returned.
2. Refund Liability: An entity also recognizes a refund liability (current liability) for the products expected to be returned.
3. Asset Recognition: An entity recognizes an asset (and corresponding adjustment to cost of sales) for its right to recover products from customers at the end of the return period. This asset is measured at the former carrying amount of the inventory, less any expected costs to recover the products.

By comparison, under the previous standard (IAS 18), revenue was often only recognized to the extent it was probable there would be no reversal if the customer exercised its right to return the product.

As an example, let's assume a company sells 1000 units of a product at $50 each, and based on past experiences, expects a 2% return rate. Under IFRS 15, the company would recognize revenue for 980 units (1000 units * 98%) at the point of sale, and it would also recognize a refund liability and a return asset for the 20 units expected to be returned. This approach provides more useful information to users of financial statements by depicting the transfer of goods while also reflecting the expected returns.