QUESTION $1$

$(15$ Marks$)$

VodaCell is a popular cellular network provider which offers a number of different cellular products and services to members of the public.

Amongst its vast cellular products and service offering, VodaCell has a contract called BudgetPro contract aimed at young professionals who spend a significant amount of time on social networks. It is a $24$ month contract in which the customer pays R$1500$ per month in exchange for the following products and services:

A cell phone, namely the" iCell" which the company also sells separately at a price of R$15000.$

$200$ minutes of voice call time per month which is worth R$400$ per month.

$2$ GB of data per month to the value of R$350$ per month.

A cell phone pouch worth R$200$

The products and services above are considered to be separate performance obligations.

Upon signing the contract, the customer receives, the cell phone "iCell", pouch, $200$ minutes and $2$ GB data for the month. No deposit is required.

Terms and conditions

The data and minutes are both non$-$cumulative i$.$e$.$ any unused data at month end will be forfeited.

The monthly contract fee is payable on the last day of the month.

Vodacell sold a large number of "iCell" contracts in the current year

Assume that sales are made at the beginning of the month.

Required:

$1\mathrm{.}1$ Determine the amount of revenue which VodaCell should allocate to each performance obligation in each BudgetPro contract package sold.

Ignore the effects of discounting.

$1\mathrm{.}2$ Discuss the concept of recognition of revenue either at a point in time or overtime in terms of Step $5$ of the revenue recognition process. And indicate which of the revenue will be recognised at a point in time or overtime, according to the performance obligations identified in the question.

Journal narrations are not required.

Ignore the effects of discounting.

$(6)$