c) Ugreen Computer Sdn. Bhd. (Ugreen), a software developer company, enters into a contract with Tineco Trading to transfer a software license, perform an installation service and provide software updates and technical support (using online and telephone) for a two-year period. Ugreen sells the license, installation service and technical support separately to other customers. The installation service includes the installation of software with the customer’s logo which appears on the computer screen. The installation service may be performed by other entities and does not significantly modify the software. The software remains functional even without the updates and the technical support. Identify how many performance obligation(s) are there in the contract above and explain the reason(s) for your answers.
(c) Ugreen Computer Sdn. Bhd. (Ugreen), a software developer company, enters into a contract
with Tineco Trading to transfer a software license, perform an installation service and provide
software updates and technical support (using online and telephone) for a two-year period.
Ugreen sells the license, installation service and technical support separately to other customers.
The installation service includes the installation of software with the customer’s logo which
appears on the computer screen. The installation service may be performed by other entities
and does not significantly modify the software. The software remains functional even without
the updates and the technical support.
Identify how many performance obligation(s) are there in the contract above and explain the
reason(s) for your answers.
(d) Gigabyte Sdn. Bhd. (Gigabyte) is a trader in selling accounting software packages to small and
medium sized businesses. An accounting software package is sold to Axis Sdn. Bhd. at a price
of RM50,000 which is payable before delivery. A 90-day trial period is given upon delivery
but there is no maintenance support after the trial period.
Based on past experience, customers take about four months to be able to use the accounting
software independently without any support from Gigabyte. In such a situation, Gigabyte will
provide on-site support free of charge for another one month. However, if a customer requests
for on-site support after four months, Gigabyte will provide the service under another service
contract with the customer at the rate of 10% of the total contract price.
Explain how to account for the above revenue in the books of Gigabyte Sdn. Bhd. using the
five-step model of IFRS 15/MFRS 15 Revenue from Contracts with Customers.
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