r XYZ Marbles (Pty) Ltd is a principle or an agent as per IFRS 15 provisions of principle and agent consideration. Prepare journals to reflect the transactions on the 28 February 2020, in the books of the companies.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
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:
1. 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
2. Buy and Deliver (Pty) Ltd is to clear all the export requirements XYZ (Pty) Ltd in Namibia.
3. XYZ Marbles (Pty) holds the risk of the Marbles stock until they reach the customer.
4. 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:
Discuss whether XYZ Marbles (Pty) Ltd is a principle or an agent as per IFRS 15 provisions of principle and agent consideration.
Prepare journals to reflect the transactions on the 28 February 2020, in the books of the companies.

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Revenue Recognition
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education