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Derringdo sells package which gives a customer a free laptop when they sign a two year contract for a provision of broadband services . the laptop had a stand alone price of $200 and broadband contract is for $30per month
In accordance with IFRS 15 revenue from contract and customer what amount vl b recognised as revenue on each package in the first year ?
Ans is 439 idk how did they get this answerPrice for contract
Laptop – $0
2 yrs contract – $720 (30*24)Total value of the transaction is $200 + $720 = $920
Stand alone contract
Laptop – $200 @ 22% (200/920)
Contract- $728 @ 78% (720/920)Actual price
Laptop – 22% * 720 = 158
Contract – 78% * 720 = 562At laptop delivery
Recognise revenue
Dr Contract Asset $158
Cr Revenue $158Service
Dr Receivable $360 (30*12)
Cr Contract Asset $78 (12/24 * $158)
Cr Revenue $281 (12/24 * $562)Total Revenue recognised in the first year $158 + $281 = $439
Better?
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