Discuss whether XYZ Marbles (Pty) Ltd is a principle or an agent as per IFRS 15 provisions of principle and agent consideration 2. Prepare journals to reflect the transactions on the 28 February 2020, in the books of the companies.
QUESTION
XYZ Marbles (PTY) Ltd has entered into agreement with Buy and Deliver (Pty) Ltd to provide the following goods to its customer in South Korea. The terms of the agreement are as below:
- Buy and Deliver (Pty) Ltd is to arrange for the transport of the marbles from Namibia to the South
Korean customer. The cost of transport will be on XYZ Marbles (Pty) Ltd
- Buy and Deliver (Pty) Ltd is to clear all the export requirements XYZ (Pty) Ltd in Namibia.
- XYZ Marbles (Pty) holds the risk of the Marbles stock until they reach the customer.
- XYZ (Pty) Ltd has set the price of the Marbles at N$ 1,000,000.00. Buy and Deliver is not allowed to make any changes to the price set.
The transaction has been completed as below:
01 January 2020
XYZ Marbles (Pty) Ltd completes the extraction of the marbles.
30 January 2020
Buy and Deliver arranges the transport to South Korea of the Marbles
28 February 2020
The customer receives the goods and pays over the sale amount of N$ 1,000,000 to XYZ Marbles (Pty) Ltd
28 February 2020
XYZ (Pty) Ltd pays a commission amount of N$200,000.00 to Buy and Deliver (Pty) Ltd.
REQUIRED TO;
1.
Discuss whether XYZ Marbles (Pty) Ltd is a principle or an agent as per IFRS 15 provisions of principle and agent consideration
2.
Prepare journals to reflect the transactions on the 28 February 2020, in the books of the companies.
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