DipIFR Syllabus B. Elements of financial statements - 'Bill And Hold' Arrangements - Notes ^{7 / 8}

A form of sales arrangement in which a seller of a good bills a customer for products but does not ship the product until a later date.

Revenue is normally only recognised when goods are shipped to the buyer.

All of following criteria must be met before a bill and hold transaction will be allowed:

• The risks of ownership have passed to the buyer

• The buyer has committed in writing to buy the goods

• The buyer has requested that the seller hold the goods, and has a business reason for doing so

• There is a scheduled delivery date for the goods that is reasonable

• There are no remaining obligations that the seller must complete

• The goods cannot be used to fill orders from other customers, and so have been segregated

• The goods must be complete