In a consignment sale arrangement, when is the original seller considered to have made a sale?

In a consignment sale arrangement, the original seller is considered to have made a sale when the buyer sells the goods to a third party. This principle is rooted in the nature of consignment sales, where the original seller retains ownership of the goods until they are sold by the buyer.

In a typical consignment arrangement, the seller provides goods to the consignee (buyer) who will attempt to sell these goods to the end customers. The consignee does not own the goods outright; instead, they act as an agent for the seller. The sale is not recognized until the consignee successfully sells those goods to a third party, at which point ownership transfers, and revenue is recognized for the original seller.

The other options do not accurately reflect the essence of consignment agreements. Delivering the goods does not constitute a sale in this context because the seller still retains ownership until the goods are sold. Payment from the buyer isn't an indicator of a sale either, as it may happen whether or not the goods are ultimately sold to a third party. Lastly, reaching an agreement does not complete the sale process, as the seller's revenue is contingent on the consignee's ability to sell the goods.