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I think I understand.. So we record the full revenue for the phone, calculate the interest applicable for each financial year and record it at the end of the relevant year?
Oh sorry, for some reason I thought your question was more for introspection than practical reasons. I study at the University of KwaZulu Natal. I’m a 3rd year studying towards a CA(SA). Our course administrators decided that because we would need to learn it next year anyway, they might as well teach it to us now and therefore it is examinable for us.
EDIT: Introspection meaning I thought you were hoping he would discover the answer for himself
I saw this thread and decided not to open a new one.
So my question: is time value of money still applicable to IFRS 15 and how do you account for it?
For example: A cellphone sold on an installment sale agreement over 24 months as well as services such as minutes, etc. The phone is worth $400 and the payments are $50/month.
From my understanding: we record the value of the phone as revenue on the day the risks and rewards are passed to the customer and the excess value $800 ($50 x 24 months – $400) is accounted for evenly over the 24 months.
What I don’t understand is how do we account for the interest on the cellphone over the 24 months?
