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BPP Exam Revision Kit 2021 – Derringdo Co Case (Q.143)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › BPP Exam Revision Kit 2021 – Derringdo Co Case (Q.143)

  • This topic has 1 reply, 2 voices, and was last updated 8 months ago by P2-D2.
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  • October 10, 2021 at 3:44 am #637370
    nataliemcc
    • Topics: 5
    • Replies: 0
    • ☆

    Can anyone correct me if I’m trying to explain the answer…..thx~

    Q.143
    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.

    Required
    In accordance with IFRS 15 Revenue from Contracts with Customers, what amount will be recognised as revenue on each package in the first year?

    Answer
    Stand-alone price
    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 #637789
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    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.

    Thanks,

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