Tutorial question IFRS15 & IFRS9

ABC is a public company listed with Bursa Malaysia. It has a reporting date of 31 December 2022. A-toy is ABCs best-selling toy. ABC entered a contract with XYZ to sell A-Toy and its electronic comic book. The contract stated that XYZ must pay ABC a royalty for every issue of book sold. Throughout 2021, XYZ paid the royalty on timely basis. However, XYZ facing cash flow difficulties since the beginning of 2022. XYZ paid minimal royalty for the 1 st 6 months of sales generated. From July 2022, XYZ lost few major customers and lost its credit facilities. XYZ continued to sell A-Toy and electronic comic books but failed to make any further royalty to ABC.

You are required to: (i) propose how to account for the above transactions in the financial statement of ABC in accordance with IASs/IFRSs/MFRSs.

Submission format:

1. Brief relevant discussion on: Key definition, Recognition, Measurement & Disclosure/Presentation. (4m)

2. Propose how ABC should account for the above transactions in accordance with the above IASs/IFRSs/MFRSs and its impact on the financial statements. (6m)