medium · Financial Accounting revenue-recognition

In Step 2, if a contract includes a 'right of return' for the customer, how is that return right treated?

1. As a contingent liability disregarded in the accounts until the return actually occurs
2. As an intangible asset that is shown on the company's balance sheet
3. As a distinct performance obligation to provide a future refund service
4. As a reduction of the transaction price, not a separate performance obligation

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