Question

I. Bil & Hold Concept: On June 1st, Joseph & Company received a $500 deposit for 80 cases of wine. On June 10th the customer identified specific vintages that are included in Joseph's inventory, and asked that Joseph not ship the wine until June 20 so the customer could ready space to store the wine, so Joseph set those wines aside for the customer, boxed and ready for shipment to the customer. On June 20th the wine was shipped and delivered to the customer. Joseph likely would recognize revenue on

Answer 1

Let us understand first what is Bill & Hold Agreement .

It is a contract under which an entity bills a customer for a product but the entity retains the physical possession of the Product until certain period of time in future. This situation happens when a buyer is not ready to take the possession of goods but takes the title and accepting the bills.

The new revenue standard focuses on when the control of the goods transfer to the customer to determine when
revenue is to be recognized. Following conditions should be fulfilled under this agreement to consider the transfer of control of goods .

1) The reason for the bill and hold arrangements must be substantive.

2). The goods must be identified separately as belonging to the customer.

3) The goods must be ready for delivery to the customer.

4)The entity can not have the right to use the goods or to sell/direct the goods to other customer.

. As per the above conditions goods will be transferred on the date of agreement.

In the given case Joseph & Co was asked to retain the goods on June 10th. Hence this date will be considered as Agreement date and revenue should be recognized on this date.