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This means the seller retains ownership and responsibility for the goods during the shipping process until theyre delivered to the buyers specified location. For example, assume Company XYZ in the U.S. buys computers from a supplier in China and signs a FOB destination agreement.
What is an example of a FOB destination?
In a FOB shipping point contract, the seller transfers any title of ownership to the buyer upon the product leaving the sellers location. The buyer then has full ownership. In a FOB destination sale contract, the buyer may not receive the title of ownership until the product reaches the buyers location.
What is an example of a FOB point?
Examples of FOB shipping point The equipment, or product, may be in transit until it arrives at the buyers location, which might be scheduled for March 10. In this case, the seller would record a sale for March 5, as well as tracking the sale as an account receivable and a reduction in inventory.
What is a FOB destination?
FOB (Freight on Board) Destination is a shipping term which means that the seller retains the legal title to the goods until they reach the location of the buyer. In this case, the seller pays for the transportation of the freight and takes care of additional freight charges until the goods reach the buyer.
What is a real life example of FOB destination?
Example of FOB Destination: Real-World Scenario The seller loads the goods onto a shipping vessel in China and covers the shipping costs and insurance. The goods are then transported across the ocean to the United States. Upon arrival, the goods go through customs clearance, which the seller also handles.
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FOB Example Lets say a buyer from the United States is purchasing a container of auto parts from a seller in China. The seller agrees to FOB Origin terms, which means that they are responsible for the costs and risks associated with transporting the goods until it arrives at the port of departure.
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