Han Bhd entered into a contract to supply, install and maintain 2,000 units of air conditioners for
Question:
Han Bhd entered into a contract to supply, install and maintain 2,000 units of air conditioners for school hostel buildings at a price of RM2,500 per unit including warranty. The maintenance and warranty period is for 1 year starting from the date of completion of installation. However, the warranty period can be extended for 3 years if the customer makes an additional payment of RM300. This is a contract to the government and there is high certainty in relation to payment unless the company fails to meet the obligations in the contract. The installation period is according to 3 phases and takes 2 years. This is the company's first contract with the government.
Based on MFSR 15 Revenue from Contract with Customers
1) Identify and discuss whether there is a single or separate contract in the above case.
2) Discuss the five steps of revenue recognition that Han needs to do.
3) Discuss TWO (2) challenges in the implementation of MFSR 15 Revenue from Contract with Customers.
Dynamic Business Law The Essentials
ISBN: 978-0073524979
2nd edition
Authors: Nancy Kubasek, Neil Browne, Daniel Herron