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Please I got confused on question 3a (sept/dec 2017 P2 past exam) which has to do with when to recognise the revenue involved in the contract and how the allocation was done. I thought the warranty was a free one, why was the transaction price now allocated to it.
Please can you explain,
The standards don’t allow anything for free, there must be a value attached to it. The answer is therefore working out the value of the warranty within the contract.