a) Sports Kenya owns a chain of health clubs and has entered into binding contracts with sports organizations, which earn income over given periods. The services rendered in return for such income include access to their database of members, and admission to health clubs, including the provision of coaching and other benefits. These contracts are for periods of between 9 and 18 months. Sports Kenya feels that because it only assumes limited obligations under the contract mainly relating to the provision of coaching, this could not be seen as the rendering of services for accounting purposes. As a result, Sports Kenyas accounting policy for revenue recognition is to recognize the contract income in full at the date when the contract was signed.

Required: Advise Sports Kenya on how the above transaction should be dealt with in its financial statements with reference to International Financial Reporting Standards where appropriate. (6 marks)