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IFRS 15

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 15

  • This topic has 1 reply, 2 voices, and was last updated 5 months ago by Stephen Widberg.
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  • January 14, 2022 at 12:56 pm #646033
    thanh123
    • Topics: 39
    • Replies: 26
    • ☆☆

    Hello tutor, I have a problem IFRS 15. In particular, 47 Kiko Co – BPP kit (version 2021-2022)

    Question is extracted from BPP kit:
    Exhibit 1 – Gift cards
    Kiki Co sells $50 gift cards. These can be used when purchasing any of Kiki Co’s products
    through its website. The gift cards expire after 12 months. Based on significant past experience, Kiki Co estimates that its customers will redeem 70% of the value of the gift card and that 30% of the value will expire unused. Kiki Co has no requirement to remit any unused funds to the customer when the gift card expires unused.

    The answer is extracted: For every $1 redeemed, Kiki Co should recognise $1.43 ($1 x 100/70) in revenue.
    —> I think it is not correct, variable consideration is estimated 70% using gift cards which means that 70% * $50 is recorded in revenue.

    Because, the answer is too long, I hope you can review the answer from BPP kit version 2021-2022. I hope you can explain the reason why BPP kit answers $1 * 100/70.

    Thanks Tutor a lot !

    January 14, 2022 at 4:56 pm #646063
    Stephen Widberg
    Moderator
    • Topics: 10
    • Replies: 2528
    • ☆☆☆☆☆

    Barry buys a gift card for 50.

    He uses 35 of the card in the shop, then throws the card away.

    Shop should book revenue of 50 (which 100/70 of 35).

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