Boomerang Computer Company sells computers with an unconditional right to return

Question

Boomerang Computer Company sells computers with an unconditional right to return the computer if the customer is not satisfied. Boomerang has a long history selling these computers under this returns policy, and can provide precise estimates of the amount of returns associated with each sale. Boomerang most likely should recognize revenue:
1When Boomerang receives cash from the customer.
2When Boomerang delivers a computer to a customer.
3When a customer returns a computer.
4Never, because the right of return is unconditional.

Explanation / Answer

When Boomerang delivers a computer to a customer, in an amount that is reduced by the expected returns.

Because Boomerang is also accounting for the expected returns / loss.

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