illibur signed a sale contract with Raindrops Limited (Raindrops) on 15 January 2015 foran amount of N$2 800 000. The sale agreement involves Excillibur providing software,successfully installing the software at Raindrops and providing maintenance services for twoyears to Raindrops.The software was physically delivered to Raindrops on 31 January 2015.The installation ofthe software was successfully completed over the weekend of 31 January and 1 February2015.The stand-alone prices of the components of the contract are as follows:• Software N$ 650 000• Installation of software N$ 840 000• 2 year Maintenance serv
Excillibur signed a sale contract with Raindrops Limited (Raindrops) on 15 January 2015 for
an amount of N$2 800 000. The sale agreement involves Excillibur providing software,
successfully installing the software at Raindrops and providing maintenance services for two
years to Raindrops.
The software was physically delivered to Raindrops on 31 January 2015.The installation of
the software was successfully completed over the weekend of 31 January and 1 February
2015.
The stand-alone prices of the components of the contract are as follows:
• Software N$ 650 000
• Installation of software N$ 840 000
• 2 year Maintenance services N$ 2 010 000
Raindrops paid 50% of the N$3 500 000 after the completion of the installation, and will pay
25% at the end of December 2015 and 25% at the end of December 2016.
The contract does contain a significant financing component but the effect of the financing
component is not material.
REQUIRED:
a) Discuss how Excillibur Limited should measure the contract with Raindrops Limited
for the year ended 31 December 2015 in terms of IFRS15, Revenue from contracts
with customers. (13)
Discuss only step 3 and 4 of the 5 step process
Step by step
Solved in 3 steps
