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This question is from December Mock 2022. I cant understand how they found out the percentage 90% and 10%?
Dovercourt Copiers Co sells a photocopier to Manningtree for $8,400. The price includes five years’ servicing. The copier is also sold without servicing for $7,740 and servicing is sold for $172 per annum.
Under IFRS 15 Revenue from Contracts with Customers, how should the $8,400 transaction price be split between the different performance obligations?
SOLUTION-
Performance obligation Stand-alone selling price % of total Transaction price allocatedCopier $7,740 90% $7,560 (8,400 × 90%)
Servicing (172 × 5) $860 10% $840 (8,400 × 10%)
Total $8,600 100% $8,400
Hi,
The stand alone price for the sale would be $7,740 for the copier and $860 (5 years @ $172 per annum) for the servicing. This gives a total of $8,600 is sold separately.
We then split the revenue based upon the sand alone prices so for the copier it is $7,740/$8,600 which gives 90%. I’ll then leave you to look at the servicing component.
Thanks
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