You are an accountant at Blast Accounting Co. Your client, Laura Carter is the owner of Need

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Question:

You are an accountant at Blast Accounting Co. Your client, Laura Carter is the owner of Need for Speed Ltd., which is a car dealership. She emails you asking for some assistance: Hi, we’ve recently come out with a bunch of new promotions! We have decided to bundle sales of 2022 Toyota Corollas and three-year “car wash” plans. The car wash plans include free external car washes, internal car cleaning, regular oil changes, and tire changing. The “car wash” plans tend to be used by customers approximately evenly over the three years. The 2022 Toyota Corolla sells for $22,000 on its own. The three-year car wash plan sells for $2,000 on its own and is effective on the date that the vehicle is picked up by the customer. We sell the bundle of both for $23,000. Each Corolla costs us $11,000, and we pay an additional $1,000 to get the vehicle transported from the wholesaler to our showroom so it is ready to be viewed by and sold to customers. We also pay each salesperson $600 in commission for any sale they make. We record the delivery charge as “freight in expense” and the commission charge as “commission expense” on our income statement. When a customer agrees to purchase a Toyota Corolla and car wash bundle, they sign the purchase contract (let’s call this day one). Two weeks later, the customer pays us $22,000 (day 14). Once the purchase contract is signed, it takes us about a month to get the final inspections on the vehicle completed, so the customer comes to pick it up one month after the contract is signed (day 30).

We consider this to be a bill-and-hold arrangement, so, on the date the purchase contract is signed (day 1), we record the following entry: Debit A/R $22,000 Credit REVENUE $22,000 On the date of payment (day 14), we record the following entry:

Debit CASH $22,000 Credit A/R $22,000 On the date the vehicle is picked up by the customer (day 30), we record the following entry: Debit COGS $11,000 Credit INVENTORY $11,000 I was hoping for your advice on this accounting treatment?

As you know, we use IFRS. If necessary, please provide corrected entries along with corrected timing, and use IFRS 15 to explain why.