Test

1) none If the merchandise was shipped FOB shipping point than the buyer assumes responsibility once the goods leave their grounds. In this case, if Biovail is correct in stating that they sent the medication FOB shipping point than the revenues would be recorded and the buyer would be responsible for the loss. When an item is sent FOB destination the seller is responsible for the safe delivery of goods until they reach the purchasers destination. In the Biovail case, the Distributor claims that the items were sent FOB destination, meaning Biovail was responsible for the merchandise at the time of the accident. In this instance, Biovail would have to assume the financial loss of the merchandise and would not be able to recognize the revenue of that sale. However, regardless of which FOB method was agreed upon, based on SAB 101 revenue cannot be recognized in this transaction.

2) If the merchandise was shipped FOB shipping point than the buyer assumes responsibility once the goods leave their grounds. In this case, if Biovail is correct in stating that they sent the medication FOB shipping point than the revenues would be recorded and the buyer would be responsible for the loss. When an item is sent FOB destination the seller is responsible for the safe delivery of goods until they reach the purchasers destination. In the Biovail case, the Distributor claims that the items were sent FOB destination, meaning Biovail was responsible for the merchandise at the time of the accident. In this instance, Biovail would have to assume the financial loss of the merchandise and would not be able to recognize the revenue of that sale. However, regardless of which FOB method was agreed upon, based on SAB 101 revenue cannot be recognized in this transaction.