TPPG Ltd is a telecommunications provider. On 1 January 2024, the company entered into acontract to sell a smart phone and to provide two-years’ data service to a customer for $22 amonth. The stand-alone selling price of the phone and the data service is $120 and $20respectively.The customer will obtain delivery of the phone on the same day that he signed the contract,while the data service will be billed to the customer at the end of every month. The customerwill pay the bill in the following month.Required:(a) Briefly explain when revenue can be recognised according to the core principles in IFRS15 – Revenue from Contracts with Customers. (4 marks)(b) Identify the respective performance obligations in this contract. (4 marks)(c) Compute the revenue that should be recognised for the year ended 31 December 2024.Show all your workings clearly and round off answers to the nearest cent, whereapplicable.(10 marks)(d) Based on your answers in (c) above, prepare the necessary journal entries for(i) 1 January 2024; and(ii) year ended 31 December 2024
TPPG Ltd is a telecommunications provider. On 1 January 2024, the company entered into a
contract to sell a smart phone and to provide two-years’ data service to a customer for $22 a
month. The stand-alone selling price of the phone and the data service is $120 and $20
respectively.
The customer will obtain delivery of the phone on the same day that he signed the contract,
while the data service will be billed to the customer at the end of every month. The customer
will pay the bill in the following month.
Required:
(a) Briefly explain when revenue can be recognised according to the core principles in IFRS
15 – Revenue from Contracts with Customers. (4 marks)
(b) Identify the respective performance obligations in this contract. (4 marks)
(c) Compute the revenue that should be recognised for the year ended 31 December 2024.
Show all your workings clearly and round off answers to the nearest cent, where
applicable.
(10 marks)
(d) Based on your answers in (c) above, prepare the necessary
(i) 1 January 2024; and
(ii) year ended 31 December 2024
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