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IFRS 15

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › IFRS 15

  • This topic has 0 replies, 1 voice, and was last updated 3 years ago by johnmn1234.
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  • September 8, 2019 at 3:04 pm #545550
    johnmn1234
    Member
    • Topics: 17
    • Replies: 4
    • ☆

    Dear Sir,
    I have watched your lectures on IFRS 15 but i do not understand how to recognise revenue when there are 3 performance obligations.
    Can you please check if i have correctly made the question below:

    Question:
    ABC Ltd is selling a TV and on the immediate purchase of this TV, it offers a free Sofa Bed Thames and offers technical support over 2 years. In addition, it supplies and installs the TV to the customer.
    ABC Ltd entered into contract with a customer and the combined goods and services contract sells for Rs 24,000, but if sold separately the supply and installation is sold for Rs 20,000, the technical support for Rs 2,000 and the Sofa Bed for Rs 3,000.
    If ABC Ltd sold the combined contract on 1 July 2018, demonstrate how the transaction would be presented in the financial statements for the year ended 31 December 2018.

    My Answer:
    1. Identify the contract.
    In this case it is the signed agreement

    2. Identify the separate PO:
    • Supply and Installation Service
    • Technical Support
    • Sofa Bed

    3. Determine the transaction price
    It is equal to the combined contract, i.e, Rs 24,000

    4. Allocate TP to PO
    This can be shown in the table below:
    PO SASP TP
    Supply and installation 20,000 19,200
    Technical support 2,000 1,920
    Sofa Bed 3,000 2,880
    TOTAL 25,000 24,000

    5. Recognition of Revenue
    Supply and Installation = on installation (1 July 2018)
    Technical Support = over two years (1 July 2018 to 30 June 2020)
    Sofa Bed = on purchase (1 July 2018)

    SFP (Extract)

    Non Current Liabilities
    Deferred Income 1600 (19200/12)

    Current Liabilities
    Deferred Income 2400
    = 12/24 (1920+2880)

    SPL (Extract)
    Revenue 22560
    =19200+2880+(6/24 x 1920)

    Is it correct?

    Thanks.

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