Best Farm Ltd owns a farm in a remote Australian wilderness area and offers a unique...

 

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Best Farm Ltd owns a farm in a remote Australian wilderness area and offers a unique and interactive farm experience with a range of native and farmyard animals. Best Farm Ltd offers annual membership at a price of $1,000 per person. For an up-front cash payment of the annual membership fee, a new member can pay one (1) visit to the farm per month for 12 months, have five (5) tractor rides per month for the first three months, and have one (1) ultimate overnight stay on the farm at the end of the first month following the purchase of the annual membership. These services are normally priced as follows. Service Twelve (12) visits to the farm Fifteen (15) tractor rides One (1) ultimate overnight stay (i.e.. accommodation, dinner and breakfast) Price $600 per person $300 per person $300 per person Best Farm Ltd is a reporting entity, has adopted AASB 15: Revenue from Contracts with Customers and has a 31 December year end. Required: On 1 January 2022 Ed Smith purchased an annual membership and paid a total up-front membership fee of $1,000. Considering AASB 15: (a) Identify the performance obligation(s) promised in the contract between Best Farm Ltd and Ed Smith (3 marks). (b) Allocate the transaction price across the performance obligation(s) and prepare the journal entry at 31 January 2022 to record the revenue for January 2022. Rounds amounts to the nearest whole dollar (6 marks). Note: include all workings, narrations are not required Best Farm Ltd owns a farm in a remote Australian wilderness area and offers a unique and interactive farm experience with a range of native and farmyard animals. Best Farm Ltd offers annual membership at a price of $1,000 per person. For an up-front cash payment of the annual membership fee, a new member can pay one (1) visit to the farm per month for 12 months, have five (5) tractor rides per month for the first three months, and have one (1) ultimate overnight stay on the farm at the end of the first month following the purchase of the annual membership. These services are normally priced as follows. Service Twelve (12) visits to the farm Fifteen (15) tractor rides One (1) ultimate overnight stay (i.e.. accommodation, dinner and breakfast) Price $600 per person $300 per person $300 per person Best Farm Ltd is a reporting entity, has adopted AASB 15: Revenue from Contracts with Customers and has a 31 December year end. Required: On 1 January 2022 Ed Smith purchased an annual membership and paid a total up-front membership fee of $1,000. Considering AASB 15: (a) Identify the performance obligation(s) promised in the contract between Best Farm Ltd and Ed Smith (3 marks). (b) Allocate the transaction price across the performance obligation(s) and prepare the journal entry at 31 January 2022 to record the revenue for January 2022. Rounds amounts to the nearest whole dollar (6 marks). Note: include all workings, narrations are not required

Answer rating: 100% (QA)

a The performance obligations promised in the contract between Best Farm Ltd and Ed Smith are as fol... View the full answer