AASB 15 Revenue from Contracts with Customers 55,B20-B27: Recognise a refund liability for consideration you expect to return, and account for sales with a right of return through revenue net of expected returns, a refund liability and a recovery asset

What does 55,B20-B27 require?

Consideration received that the entity expects to refund is recorded as a refund liability measured at the portion to which it expects no entitlement, and updated each reporting date along with the transaction price. For sales with a right of return (refund, credit or exchange for a different product), revenue is recognised only for products not expected to be returned, estimated under the variable consideration rules and constraint, with a refund liability for the rest and an asset for the right to recover returned goods measured at the former inventory carrying amount less expected recovery costs and any decline in value, presented separately from the refund liability and reassessed each period. Exchanges of like products of the same quality and price are not returns, and a replacement of defective goods is a warranty matter.