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ifrs 15

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › ifrs 15

Viewing 4 posts - 1 through 4 (of 4 total)
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  • August 22, 2017 at 12:21 pm #402934
    adarsh1997
    Participant
    • Topics: 646
    • Replies: 282
    • ☆☆☆☆

    Hi Mike!

    I need your help for a question in the BPP kit

    Derringdo is a broadband provider. Derringdo also sells a package which gives customers a free laptop when they sign a two-year contract for
    provision of broadband services. The laptop has a stand-alone price of $200 and the broadband contract is for $30 per month.
    In accordance with IFRS 15 Revenue from contracts with customers, what amount will be recognised as revenue on each package in the first year?

    1. The answer is $439.
    2. How to obtain it? The working in the book is actually a bit difficult to understand.

    Thanks.

    August 22, 2017 at 2:06 pm #402945
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    I get the feeling that you haven’t given me full information (or maybe BPP have missed some key point out of the question)

    All the questions titled Derringdo that I can lay my hands on bear no relationship to the question you have posted!

    Are there no dates nor cost of capital given in the question?

    Are you sure that you have given me the correct name for the question?

    August 22, 2017 at 2:27 pm #402959
    adarsh1997
    Participant
    • Topics: 646
    • Replies: 282
    • ☆☆☆☆

    The name of the question is actually “Derringo” and it’s a section B question. The case is more on IAS 20 and information given is relates to IAS 20.

    Year 1 $
    Laptop (W) 158
    Broadband (562 (W) /2) 281
    439
    Working
    Laptop 200 x 22% = 158
    Broadband (30 × 12 × 2) = 720 (78%)562
    920 x 100% 720

    That’s the working from the BPP kit and I am bit confused with it.

    August 22, 2017 at 2:59 pm #402973
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    Laptop value is $200
    Contract value is $720 (2 years @ $30 per month)

    Total value is $920

    Of this total, the laptop represents 200/920 = 21.7% (rounded to 22%)
    and the broadband contract is 720/920 = 78.3% (rounded to 78%)

    The entire contract is for $720 of which 22% relates to the laptop and 78% to the service

    So 22% of $720 relates to the laptop = $158 and that has been earned as soon as the contract is signed

    78% of $720 relates to the service of broadband supply = $562 and half of that is earned in the first year of the two year contract … = $281

    The total earned in the first year is therefore $158 + $281 = $439

    OK?

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