Question: Consulting Services Pty Ltd recognises revenue when it sends an invoice to the customer on completion of a consulting job. The firm recently restructured its

Consulting Services Pty Ltd recognises revenue when it sends an invoice to the customer on completion of a consulting job. The firm recently restructured its contracts with customers so that separate performance obligations could be identified progressively, to enable earlier recognition of revenue in accordance with AASB 15. It was able to do this by introducing specific contract performance requirements in its contracts with clients.

Required: Using an agency theory/costly contracting framework, explain the possible reasons for the change in the way that Consulting Services Ltd recognises revenue from contracts with its customers.

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