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Newmarkets Revenue as shown in its draft statement of profit and loss for the year ended 31 Dec X9 is 27 million. This includes 8 million for a consignment of goods sold on 31 dec X9 on which Newmarket will incur ongoing service and support costs for two years after the sale.
The supply of goods and provision of service and support are seperate performance obligations, under the terms of 1FRS 15.
The cost of providing the service and support is estimated at 800 000 per annum. Newmarket applies a 30% mark up to all service costs.
At what amount should revenue be shown in statement of profit and loss of Newmarket for the year ended 31 Dec X9
I calculated it to be 27 mil plus 1040 000 for this years revenue in regards to support and serives and the other 1040 000 i would understand goes to defered income. However this does not seem to be the case as the full 2080 000 is added.
Why?
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