- October 10, 2021 at 3:44 am #637370nataliemccParticipant
- Topics: 6
- Replies: 1
Can anyone correct me if I’m trying to explain the answer…..thx~
Derringdo Co sells a package which gives customers a free laptop when they sign a two-year contract for the provision of broadband services.
1. The laptop has a stand-alone price of $200 and
2. 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. Laptop ($200)
2. Broadband [$30 x 24mths = $720 x ($720/$920=78%) = $562]
Since the laptop is free when customer sign a 2-yr contract
so the total package price is $720 only, get the balance amount of Laptop ($720 – $562 = $158)
I feel confuse because I look the marking answer is writing the Laptop (200, 22%, but calculate as 40, not 158)
so I would like to find some clarification at here with tutors.October 16, 2021 at 8:33 am #637789P2-D2Keymaster
- Topics: 4
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The total stand along price is $920 and you have identified he 78% correctly meaning that 22% is then attributable to the laptop. This 22% is then applied to the amounts received of $720, which gives the $158. This is recognised at the point in which the laptop changes hands and the remainder of the amounts received spread over the 24 months.
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