| Commentary

392 Sale or return arrangements generally

| Commentary

4: SALE OR RETURN

392 Sale or return arrangements generally

Sale or return transactions are significant in distribution agreements since they may have a distorting effect on the amount of revenue to be remitted to the publisher. If the distribution agreement permits a distributor to deal with returned items of product by deducting their invoice value as distribution expenses, the distributor will receive commission on items of product where no sales revenue has been generated.

For this reason, the company may require the value of all returned items of product to be debited from the amount of receipts in the

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