9 10 11 13 14 Case Study 3 (Total: 25 Marks) Recognition of Revenue Muscle Movement Ltd (MML) is a company that operates a number of fitness clubs l'gyms') in Australia. They are dedicated to offering the best amenities, equipment, classes, programs and professional staff, to help MML's members reach their fitness goals. Nurses work in MML's clubs and play a key role in monitoring members' health. Every month, for free, MML monitor club members heart and circulatory system, measure and weigh members, and chart percentage of body fat. They use computer estimates to determine body age, which decreases month to month, as members' other fitness components improve. These benefits are all provided free of charge. MML is currently offering potential customers a new gym membership. The terms of the new gym membership are: 1. For an up-front cash payment of $900, new members will have full access all the training facilities at a nominated gym for a 12-month period. The $900 fee is non-refundable. A 12- month gym membership alone is normally priced at $960. 2. In addition, for the first three months of their membership, new members will receive free access once a week to a half-hour individual session with a personal trainer. Three months of such personal training sessions would normally cost members $420. 3. As an added incentive, all new members who attend all of their sessions with the personal trainer in the first two months will receive a 'free' set of training weights at the end of that two-month period. MML's prior experience with such offers is that all members receive the 'bonus' items at the end of the qualifying period. The training weights normally have a retail price of $80. Required: Answer all 2 questions below: Required: Answer all 2 questions below: 1. Apply the five-step model in AASB 15 to the above facts to decide when revenue will be recognised by MML for the above gym membership offer. (15 Marks) 2. Assume a new member takes up the new gym membership offer from MML. He pays the membership fee on 1 July 2020. Further assume that MML has early adopted AASB 15 and prepares monthly financial statements. What general journal entries should MML recognise on (a) 1 July 2020 and (4 Marks) (b) 31 August 2020? (6 Marks) 9 10 11 13 14 Case Study 3 (Total: 25 Marks) Recognition of Revenue Muscle Movement Ltd (MML) is a company that operates a number of fitness clubs l'gyms') in Australia. They are dedicated to offering the best amenities, equipment, classes, programs and professional staff, to help MML's members reach their fitness goals. Nurses work in MML's clubs and play a key role in monitoring members' health. Every month, for free, MML monitor club members heart and circulatory system, measure and weigh members, and chart percentage of body fat. They use computer estimates to determine body age, which decreases month to month, as members' other fitness components improve. These benefits are all provided free of charge. MML is currently offering potential customers a new gym membership. The terms of the new gym membership are: 1. For an up-front cash payment of $900, new members will have full access all the training facilities at a nominated gym for a 12-month period. The $900 fee is non-refundable. A 12- month gym membership alone is normally priced at $960. 2. In addition, for the first three months of their membership, new members will receive free access once a week to a half-hour individual session with a personal trainer. Three months of such personal training sessions would normally cost members $420. 3. As an added incentive, all new members who attend all of their sessions with the personal trainer in the first two months will receive a 'free' set of training weights at the end of that two-month period. MML's prior experience with such offers is that all members receive the 'bonus' items at the end of the qualifying period. The training weights normally have a retail price of $80. Required: Answer all 2 questions below: Required: Answer all 2 questions below: 1. Apply the five-step model in AASB 15 to the above facts to decide when revenue will be recognised by MML for the above gym membership offer. (15 Marks) 2. Assume a new member takes up the new gym membership offer from MML. He pays the membership fee on 1 July 2020. Further assume that MML has early adopted AASB 15 and prepares monthly financial statements. What general journal entries should MML recognise on (a) 1 July 2020 and (4 Marks) (b) 31 August 2020? (6 Marks)