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Hi tutor,
I am confused about the answer of working 9. I am wondering where does 2000 units come from.
“No revenue can yet be included for the 2,000 units which have not been manufactured as at 30 June 2016 as Zippy has not satisfied its performance obligation. “
Hi,
We’ve delivered 6,000 units to April and 7,000 to June’16, so a total of 13,000 by the reporting date. In order to qualify for the discounted price the customer had to order 5,000 more on top of the original 10,000, so a total of 15,000 will be ordered. If 15,000 need to be ordered and we’ve only delivered on 13,000 then there are 2,000 left to be delivered, for which we do not recognise any revenue.
In all honesty, there is no reason to mention this in the answer as the figure is not used in the current year’s financial statements.
Thanks
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