Van Hatten Consolidated has three operating divisions: DeMent Publishing Division, Ankiel Securities Division, and Depp Advisory Division. Each division maintains its own accounting system.

DeMent Publishing Division The DeMent Publishing Division sells large volumes of novels to a few book distributors, which in turn sell to several national chains of bookstores. DeMent allows distributors to return up to 30% of sales, and distributors give the same terms to bookstores. While returns from individual titles fluctuate greatly, the returns from distributors have averaged 20% in each of the past 5 years. A total of \($7\),000,000 of paperback novel sales were made to distributors during fiscal 2015. On November 30, 2015 (the end of the fiscal year),

\($1\),500,000 of fiscal 2015 sales were still subject to return privileges over the next 6 months. The remaining

\($5\),500,000 of fiscal 2015 sales had actual returns of 21%. Sales from fiscal 2014 totaling \($2\),000,000 were collected in fiscal 2015 less 18% returns. This division records revenue according to the revenue recognition method when the right of return exists.

Ankiel Securities Division The Ankiel Securities Division works through manufacturers’ agents in various cities. Orders for alarm systems and down payments are forwarded from agents, and the division ships the goods f.o.b. factory directly to customers (usually police departments and security guard companies). Customers are billed directly for the balance due plus actual shipping costs. The company received orders for \($6\),000,000 of goods during the fiscal year ended November 30, 2015. Down payments of \($600\),000 were received, and

\($5\),200,000 of goods were billed and shipped. Actual freight costs of \($100\),000 were also billed. Commissions of 10% on product price are paid to manufacturing agents after goods are shipped to customers. Such goods are warranted for 90 days after shipment, and warranty returns have been about 1% of sales. Revenue is recognized at the point of sale by this division.

Depp Advisory Division The Depp Advisory Division performs asset management services. This division grew out of Van Hatten’s own treasury and asset management operations that several of its customers asked to have access to. On January 1, 2015, Depp entered into a contract with Scutaro Co. to perform asset management services for 1 year. Depp receives a quarterly management fee of 0.25% of Scutaro’s assets under management at the end of each quarter. In addition, Depp receives a performance-based incentive fee of 20% of the fund’s return in excess of the return of the S&P 500 index at the end of the quarter (multiplied by the assets under management at quarter-end). At the end of the first quarter of 2015, Depp was managing \($2\),400,000 of Scutaro assets. The annualized return on the portfolio was 6.2% (the S&P 500 index had an annualized return of 5.7%).
Instructions

(a) For each division’s revenue arrangements, identify the separate performance obligations, briefly explain allocation of the transaction process to each performance obligation, and indicate when the performance obligations are satisfied.

(b) Compute the revenue to be recognized in fiscal year 2015 for each of the three operating divisions of Van Hatten in accordance with IFRS.