Web Co Operates a Website Selling Used Books $\bullet$ Web Co Will Transport the Books Sold to the End

Web Co operates a website selling used books. Web Co enters into a contract with Bookstore, a used bookshop, to sell books sold by Bookstore. The terms and conditions of the contract include:
$\bullet$ Web Co will transport the books sold to the end customer.
$\bullet$ Web Co does not take possession of the books sold to the customers; however, the customer returns the books to Web Co if they are dissatisfied.
$\bullet$ Web Co has the right to return books to Bookstore without penalty if they are returned by the customer.
$\bullet$ Web Co will invoice the customer for the sale.
$\bullet$ Web Co earns a fixed margin on the books sold, and has no flexibility in establishing the sales price of the book.
$\bullet$ Bookstore retains credit risk for sales to the customer.
Web Co should recognise revenue on the transfer of the books to the customer:

A) on a gross basis
B) on a net basis
C) on a gross basis as Bookstore retains all credit risk
D) on a net basis as Web Co does not set the sales price

Correct Answer:

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