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Hi, I have a question that I don’t understand
Service: The Provider will set up live coffee making stations where various types of artisan coffee will be handmade by the Provider’s highly skilled baristas based on guests’ orders during the event. Complimentary cookies will also be served together with each cup of coffee ordered.
Date: 1 Dec- 3 Dec
Consideration: USD3,000 per day + USD 3.50 per cup of coffee servedRisk and rewards of the services provided are transferred to the Customer when the Provider has satisfied its obligations stated in the contract.
The invoice was issued on 3 Dec to the customer.Is the performance obligation USD 3000 base fee per day for setting up the station and USD 3.50 for making coffee? Should I recognise revenue over the 3 day period each day or only on 3 Dec when the invoice was issued?
Hi there, in my opinion, we can deal with your case as below:
1. Performance obligation: Yes, I believe there are 2 performance obligations, namely setting up live coffee making stations and selling coffee to guests
2. Revenue recognition:
– Setting up live coffee making stations: I assume that these stations were set up on 1 Dec and dismantled on 3 Dec when the event ended. I think this performance obligation is satisfied over the 3 day period because it met the criteria “The customer simultaneously receives and consumes the benefits provided by the entity’s performance” per IFRS15.35 -> revenue should be recognized each day, at USD3,000
– Selling coffee: I think revenue should be recorded each day, corresponding to the number of cups of coffee sold in that day3. Exchange rate: I believe revenue can be converted to home currency using spot rate
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