Ejura Ltd (Ejura) is a Manufacturing and retail company which prepares financial statements in accordance with International Financial Reporting Standards (IFRS) up to 31 December each year. In order to generate or improve sales on one of its older products, Ejura offered a promotion named ‘something for free’. The promotion included free maintenance services for the first two years. On 1 October 2019, under the promotional offer, Ejura sold goods to a supermarket chain for GH¢4.4 million. A two-year maintenance contract would normally be sold for GH¢0.5 million, and the list price of the product would normally be GH¢5 million. The transaction has been included in revenue at GH¢4.4 million. Required: In accordance with IFRS 15: Revenue from Contracts with Customers, justify the appropriate accounting treatment for the above transaction in the financial statements of Ejura for the year ended 31 December 201
Ejura Ltd (Ejura) is a Manufacturing and retail company which prepares financial statements in accordance with International Financial Reporting Standards (IFRS) up to 31 December each year. In order to generate or improve sales on one of its older products, Ejura offered a promotion named ‘something for free’. The promotion included free maintenance services for the first two years. On 1 October 2019, under the promotional offer, Ejura sold goods to a supermarket chain for GH¢4.4 million. A two-year maintenance contract would normally be sold for GH¢0.5 million, and the list price of the product would normally be GH¢5 million. The transaction has been included in revenue at GH¢4.4 million. Required: In accordance with IFRS 15: Revenue from Contracts with Customers, justify the appropriate accounting treatment for the above transaction in the financial statements of Ejura for the year ended 31 December 201
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ejura Ltd (Ejura) is a Manufacturing and retail company which prepares financial
statements in accordance with International Financial Reporting Standards (IFRS) up to 31
December each year.
In order to generate or improve sales on one of its older products, Ejura offered a promotion
named ‘something for free’. The promotion included free maintenance services for the first
two years. On 1 October 2019, under the promotional offer, Ejura sold goods to a
supermarket chain for GH¢4.4 million. A two-year maintenance contract would normally
be sold for GH¢0.5 million, and the list price of the product would normally be GH¢5
million. The transaction has been included in revenue at GH¢4.4 million.
Required:
In accordance with IFRS 15: Revenue from Contracts with Customers, justify the
appropriate accounting treatment for the above transaction in the financial statements of
Ejura for the year ended 31 December 201
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