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P2-D2.
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nari
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Hello
Regarding the above lecture, around the 11 min mark there was example one which mentioned that the handset was “free” but the customer pays $45 per month for service. In the lecture it was mentioned how it would be treated under ias 18 but under ifrs 15 i am a bit confused as to how it would be treated.
Is it that since the handset is free there is:
1.no revenue recognized at all for the handset and
2.revenue is recognized for the monthly service of $45 x 12 months?
P2-D2
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Hi,
No. Under IFRS 15 we have to recognise revenue for the handset and then service revenue over the following months.
I’ll put this in the next videos.
Thanks
nari
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ok, but if that’s the case then the revenue would be $45 + $x (value of handset). The $45 would be cr revenue dr cash or receivables, the value of the handset would be cr revenue but where would the dr go to?
P2-D2
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Hi Nari,
The second IFRS 15 lecture has been uploaded where you will find the calculations being performed. Using the numbers for the services we would:
DR Contract receivable
CR RevenueThanks
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