a) A telecommunications company enters into a contract with a customer. Under the contract, the company promises to provide to the customer 4 GB data, 300 minutes of talk time, and 500 texts for $36. Required: Briefly explain how the telecommunications company should account for the contract under NZ IFRS 15. You need to refer to the relevant requirements but not to any specific paragraph of NZ IFRS 15. (12 marks) b) A company sells mobile phone sets for $99 each. The company's cost of each phone set is $70. The phone set became very popular with its customers. Near the end of the financial year, 5000 customers purchased the phone set from the company. The company allows its customers to return the phone set within 14 days if they have not unpacked the set. The return period has not expired for any phone set sold by the end of the year. The company expects, based on its past experience, that 1% of its customers will return the phone set. 

Required: 

i) Prepare the journal entries in the books of the company to record the transaction. (6 marks) 

ii) Explain why the transaction is recorded in this manner using NZ IFRS 15

Answer rating: 100% (QA)

Step 1 Whenever a Telecommunication company is entering into a contract with the customer it has to ... View the full answer