2:13 online.uts.edu.au vodafone AU Exercise 15.9Multiple-element arrangement Ali

Question

2:13 online.uts.edu.au vodafone AU Exercise 15.9Multiple-element arrangement Alissa Ltd provides a bundled service offering to Customer B. It charges Customer B S35 000 for initial connection to its network and two ongoing services- access to the network for year and on-call troubleshooting' advice for that year Customer B pays the $35 000 upfront, on 1 July 2020. Alissa Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be: Connection fee 5 5000 Access fee Troubleshooting 23 000 12 000 The end of Alissa Ltd's reporting period is 30 June. Required Prepare the journal entries to record this transaction in accordance with AASB 15/IFRS 15 for the vear ended 30 June 2021, assuming Alissa Ltd applies the relative fair value approach. Show all workings air value of Allocation of fair total consideration Exercise 15.10 Revenue recognition - rendering of services In each of the following situations, state at which date(s), if any, revenue will be recognised. A contract for the rendering of services is entered into on 1 May 2020. The services are delivered on 15 May 2020. The buyer pays for the services on 30 May 2020. 2.A contract for the rendering of services is entered into on 1 May 2020. The services are delivered

Explanation / Answer

15.9 .

At Inception of the agreement ( 1/7/2020 ) :

Since this agreement is for 1 year Alissa ltd would record the following over the year ended 30 June 2021 :

15.10.

1. ( Assumption : Contract contains a clause that entitles the buyer to rescind the purchase at time of normal warranty conditions )

    No revenue is recognised because the customer has the right to rescind the purchase at any time-beyond normal warranty conditions. The cash is recorded on receipt with the credit being recorded as a borrowing.

Fair value of each component if sold seperately Allocation of fair value to total consideration Allocated amount Connection fee 5000 5000 / 40000 * 35000 4375 Access fee 12000 12000 / 40000 * 35000 10500 Trouble shooting 23000 23000 / 40000 * 35000 20125 Total 40000 35000

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