Accounting Dictionary

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Consignee

Definition: A consignee is the party identified on shipping documents as the recipient of goods to be delivered, and which is responsible for paying customs duties as the designated owner of the goods. However, the consignee does not formally take possession of the goods until it pays the consignor (usually the party that shipped it the goods).

The consignee is usually responsible for damage to the goods given into its care, even if ownership still resides with the consignor.

An intermediate consignee is a party that receives a shipment on behalf of the ultimate consignee. The ultimate consignee is the intended final recipient of a delivery.

From an accounting perspective, the consignor retains ownership of consigned goods, so these inventory items remain on its balance sheet until such time as they are either sold by the consignee to a third party, or purchased outright by the consignee. The consignor does not record a sale transaction when goods are initially shipped to the consignee, since it still owns the goods. A sale transaction only occurs when goods are sold to a third party or bought outright by the consignee.

From the perspective of the consignee, goods received on consignment do not appear on its balance sheet, since it does not own the inventory. Instead, it records a commission on any sales to third parties. There are circumstances where the consignee can record the full amount of goods on consignment as a sale; those circumstances are discussed in the revenue at gross or net article.