- This topic has 3 replies, 2 voices, and was last updated 11 years ago by
.
- Posts
Question num 42 Johan
johan sell the hand set to dealer for 150 and allow a commission of 280 on the connection of a customer and the transaction with the dealer will settled at 130.The handset cannot be sold seprately by the dealerand the service contract last for 12 months .
Firstly the revenue of $150 will be recognised or of 130 ?
According to the solution in the book it say it qualifies for IAS 38 intangible asset.But it doesnot qualify the seprabilty criteria bI can understand why you may wish to recognise $150 revenue on sale to the dealer, but I have no idea whatsoever why you may be tempted to recognise $130 – this is a PAYMENT made by Johan.
However, even the $150 should not be recognised …. yet
The effect of delivering returnable handsets to the dealer is the sale of goods on consignment to an agent. The sale by the agent (which is the time when the agent earns commission) coincides with the ultimate customer signing a contract. Neither the handset nor the service contract can be separately sold and Johan earns money not from the delivery of the handset but on the 12 month use by the customer
As for being an intangible asset, the $130 payment to the dealer has the effect of paying the dealer for finding a customer and is thus a purchase to increase the customer base
Does that answer your question?
- You must be logged in to reply to this topic.