INSTRUCTION: Read the following cases and answer the questions that follow.

Question 1

Case A

Company Z enters into an arrangement with Customer A to deliver Company Zs products to Customer A on a consignment basis. Pursuant to the terms of the arrangement, Customer A is a consignee, and title to the products does not pass from Company Z to Customer A until Customer A consumes the products in its operations. Company Z delivers product to Customer A under the terms of their arrangement.

Required:

Should Company Z recognize revenue upon delivery of its product to Customer A? Give valid reasons for your answer . Also include the rights and responsibilities of seller and buyer. [10 marks