Agility Limited (Agility) is a company that develops software solutions for clients in the healthcare, hospitality and transportation industries. Platformia contract Platformia Limited (Platformia) is a company that operates a chain of physiotherapy practices. Agility has recently signed a contract to develop software for Platformia and install it into Platformia's systems. The installation of the software is highly complex and enables the software to comply with strict privacy requirements relating to patient data while enabling information to be securely shared with external healthcare providers. Only Agility can perform the installation of its software. As the software development and installation are highly interrelated, there is only one performance obligation in the contract. The contract price is $400,000, payable as follows: Percentage of Milestone contract price payable Upon contract signing 10% Upon completion of development of software 30% Upon commencement of installation of software 40% Upon client sign off of user acceptance testing 20% Additional information * Agility recognises revenue from the contract over time. lts accounting policy is to use an input method based on budgeted labour hours to measure the degree to which its performance obligations are satisfied. * The contract was signed on 4 February 2025, and Platformia made the required payment on this date. * Agility completed the software development on 2 June 2025, and the client was invoiced on this date. By 2 June 2025, Agility estimates that 48% of the total budgeted labour hours had been worked on the Platformia contract. Platformia paid the invoice on 9 June 2025. By 30 June 2025, 65% of the total budgeted labour hours had been worked on the Platformia contract. Agility commenced installation of the software on 3 July 2025. * Agility has an enforceable right to payment for performance completed to date. In addition, Platformia does not have the right to terminate the contract unless Agility fails to perform as promised. Deferred tax information Agility has various types of contracts applicable to different clients, including Platformia. Assume the Platformia contract has been correctly accounted for and included within Agility's statement of financial position balances at 30 June 2025 shown below: Item Trade receivables Contract assets Contract liabilities The tax rate is 30%. Required Balance 5 3,500,000 700,000 800,000 Details and tax treatment Trade receivables are $3,500,000 at 30 June 2025, net of the allowance for expected credit losses of $200,000. For tax purposes, the revenue is assessable when the customer is invoiced. A deduction is allowed for tax purposes when the trade receivable is written off and has been previously brought to account as revenue. For tax purposes the contract assets balance will be assessable when the customer is invoiced. For tax purposes the contract liabilities balance will be assessable when the performance obligation is satisfied. (a) This task relates to the Platfornmia contract: Prepare Agility's journal entries relating to its contract with Platformia for the year ended 30 June 2025. Show your workings. |gnore any journal entries relating to contract costs. Ignore the impact of tax. (8 marks) (b) This task relates to the deferred tax information: Calculate Agility's temporary differences at 30 June 2025. Show your workings. Justify any exclusions. (3 marks) 11 marks