[1] It is generally done during auctions, shipping, goods transfer, or putting something up for sale in a consignment store.
Consignment (Latin: consignatio, meaning "securitization" or "document") is a traditional legal and accounting technical term for logistics and business management and describes a special form of delivery of goods.
This is because there are major legal, tax-related, and accounting difficulties in conducting cross-border consignment trade.
[citation needed] Consignment inventory is a stock control model whereby the retailer sells the goods but the ownership remains with the supplier only till the products are sold.
Beforehand, the two parties may have sign a consignment agreement with the terms like how long will the unsold goods take before being returned.
In consignment shops, it is usually understood that the consignee (the seller) pays the consignor (the person who owns the item) a portion of the proceeds from the sale.
The consignor retains title to the item and can end the arrangement at any time by requesting its return.
Merchandise often sold through consignment shops includes antiques, athletic equipment, automobiles, books, clothing (especially children's, maternity, and wedding clothing, which are often not worn out), furniture, firearms, music, musical instruments, tools, paragliders and toys.
They also differ from pawn shops in which the original owner can surrender physical possession (but not legal title) of the item in exchange for a loan and then reclaim the item upon repayment of the loan with interest (or else surrender legal title to the item), or alternatively can surrender both physical possession and legal title for an immediate payment; the pawn shop would retain all proceeds from any subsequent sale.
When a vendor (consignor) provides goods on consignment to a distributor (consignee) then revenue cannot be recognized when control has transferred.