All Star Ltd provides a bundled service offering to Bruce Ltd. It charges Bruce Ltd $28 000
Question:
All Star Ltd provides a bundled service offering to Bruce Ltd. It charges Bruce Ltd $28 000 for initial connection to its network and two ongoing services — access to the network for 1 year and ‘on-call troubleshooting’ advice for that year.
Bruce Ltd pays the $28 000 upfront, on 1 July 2024. All Star Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:
The end of All Star Ltd’s reporting period is 30 June.
Required
Prepare the journal entries to record this transaction in accordance with AASB 15/IFRS 15 for the year ended 30 June 2025, assuming All Star Ltd applies the relative fair value approach. Show all workings.
Step by Step Answer:
Financial Reporting
ISBN: 9780730396413
4th Edition
Authors: Janice Loftus, Ken Leo, Sorin Daniliuc, Belinda Luke, Hong Nee Ang, Mike Bradbury, Dean Hanlon, Noel Boys, Karyn Byrnes