A. The recognition of revenue in case of FOB (Free on Board) and CIF (Cost, Insurance and Freight) basis is determined by the point at which the ownership of the goods is transferred to the buyer.
In case of FOB (Free on Board) basis, the ownership of the goods is transferred to the buyer once the goods are loaded on the shipping vessel or mode of transportation at the point of origin. The seller is responsible for the costs of loading the goods and the buyer is responsible for all costs and risks associated with the transportation of the goods from the point of origin to the final destination. Revenue can be recognized by the seller at the point of loading of goods on the shipping vessel, when the goods are transferred to the buyer, and the buyer takes on the risk and the title of the goods.
In case of CIF (Cost, Insurance and Freight) basis, the ownership of the goods is transferred to the buyer once the goods are loaded on the shipping vessel or mode of transportation at the point of origin. The seller is responsible for the costs of loading the goods, arranging and paying for insurance and the cost of transportation of the goods to the final destination. Revenue can be recognized by the seller at the point of loading of goods on the shipping vessel, when the goods are transferred to the buyer, and the buyer takes on the risk and the title of the goods.
