1 January 2016, Impress Supplies Sdn Bhd (ISSB) enters into two contracts (Contract A and Contract B) with customers that are similar except for termination provisions. Each is for the sale of 10,000 customized parts at RM100 per part. On 31 March 2016, ISSB produced and held a total of 4,000 parts of finished goods and an additional 100 parts in WIP with costs-to- date of RM5,000. The total cost to produce each part is RM90. Contract A Contract A states that if the contract is terminated, the customer is required to pay the full price for all finished goods on hand. For parts in process, the customer is required to pay ISSB its cost plus 10% which is the expected margin on the finished goods. The parts have no alternative use to ISSB. As such, if the contract is terminated on 31 March 2016, ISSB would be entitled to RM405,500 (RM 100 for the 4,000 finished goods and cost of RM5,000 plus 10% for the 100 parts in WIP). Contract B Contract B states that if the contract is terminated, the customer is required to pay the full price for all finished goods on hand and only ISSB's cost for any parts in WIP. The parts have alternative use to ISSB. As such, if the contract is terminated on 31 March 2016, ISSB would be entitled to RM405,000 (RM100 for the 4,000 finished goods and cost of RM5,000 for the 100 parts in WIP). ACCT3601/June 2021 Page 4 of 5 Required: a) Describe when the company can recognize its revenue from contract. (8 marks) (CLO2:PLOS:C5) b) Determine how should ISSB recognizes revenue from contract A and B. Elaborate your answer. (6 marks) (CLO2-PLOS:C5) c) Advice the accountant for ISSB regarding the disclosure requirement as per stated in Malaysian Financial Reporting Standards (MFRS) 15 Revenue from Contract (8 marks) (CLO2.PLOS:C5) d) Explain at least TWO (2) importance of MFRS 15 for companies which handle many types of contracts. 7:14 Expert Q&A Done 1 January 2016. Supplies Sdn Bhd (IS) Cand Contract with theme hat we samilar except formation sale of 10.000 customized parts at RM100 per part On 31 March 2014. de held oal of 4,000 parts of finished predsed in additional 100 pana in Wir date of RM5.000. The total cost to produce charts Contract Contract states that if the contract is terminated the came to the price for all finished goods and For parte process the comme ISSBs couples which is the expected marine the Bandera The persone As such, if the contract is cominated 1 March 2016 Swed KM25.500 (RM100 for the 4,000 finished pool and cost of BMS. 100 in WIP Contact Contract states that if the cost the cared to de price for all finished goods handy is cow the have where to SSB Asacheter Mads would be entitled to RM5,000 (EM 100 So the 2.000 finished podandome RS. for the 100 parts in WIP ACCT36001 Required * Describe when the company can cognize is ICLOS FLOS Determine how should as rengine revenue front and labore your LOS LOS Athice the account for 18 regarding the disease Malaysian Financul Reporting Standard ( MRS) 15 Ref Comet ICLOCV05 Explaint TWO potee of Rs 15 de many type of contracte