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The BPP answer is saying this:
”In this case no licence income should be deferred at all and there is a material misstatement, understating revenue and overstating assets.
I am not agreeing when he says overstating assets. It should be overstating liabilities because we DR Bank or Cash and CR deferred income (current liability)
Right?
If by overstating liabilities you mean deferred income then yes:
If the recorded transaction is:
Dr Cash Cr deferred income
And it should be
Dr Cash/receivable and Cr revenueThank you so much. It is a pity that an approved content has a silly mistake.
Perhaps it was an oversight or typo when then question was updated for IFRS 15 – I am sure BPP investigate and correct, as necessary, all reported errors. Perhaps there is a form in the book you can use to report it?
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