(a) A customer enters into a 12-month contract with a mobile phone provider, offering a new handset...
Question:
(a) A customer enters into a 12-month contract with a mobile phone provider, offering a new handset and a data plan for Rs65 per month. The provider sells the same mobile phone model for Rs700 outright.
Stand-alone prices are:
Handset Rs450
Data plan Rs290
You are required to recognise revenue, for the first month, under IFRS15 Revenue from Contracts with Customers, when performance obligations are satisfied.
(b) During the year ended 31/12/2020 a blending machine manufacturer receives an order for 300 blending machines from a retailer, at Rs500 per blending machine (total order value Rs150k), in 3 delivery batches.
01/08/2020 the first 100 blending machines are delivered
01/09/2020the retailer amends the original order by ordering additional 200 units.
The manufacturer agrees a 30% discount for the additional units (Rs350 per unit), hoping to encourage further orders and a long-term business relationship with the retailer.
By 31/12/2020 the manufacturer delivers 400 coffee machines (300 of the original order, and another 100 towards the additional order).
Discuss how the revenue as at 31.12.2020 shall be disclosed. Show your workings.
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach