[wtburke]

@accastudent1986 said:
Here’s what the study text says;

“In relation to a bundled sale, any discount should generally be allocated across each component in the transaction. A discount should only be allocated to a specific component of the transaction if that component is regularly sold separately at a discount.”

Here’s what the question says;

“Revenue includes an amount of $16 million for a sale made on 1 April 2015. The sale relates to a single product
and includes ongoing servicing from Downing Co for four years. The normal selling price of the product and the
servicing would be $18 million and $500,000 per annum ($2 million in total) respectively”

So without question the scenario described is a ‘bundle’ sold at a discount (as in sold for less than the usual sale price)

I did the revenue recognition the same way as accastudent1986. I read it as the total sale was 16M so credits to revenue and deferred income have to total 16M, not 20M. Revenue = 16M * 18/20 + 16M * .5/20. Deferred = 16M * 1.5/20.

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