Question
GinTel Pte Ltd enters into a 24-month contract with its customer where the customer receives Paid-TV services for $30 per month (to be paid at
GinTel Pte Ltd enters into a 24-month contract with its customer where the customer receives Paid-TV services for $30 per month (to be paid at the end of each month). The customer receives a free Set-Top box. The standalone selling price of the Set-Top box is $200, the cost of the Set-Top box is $150, and the standalone selling price of the Paid- TV services is $25 per month.
(a) Under FRS 115 Revenue from Contracts with Customers, identify the separate performance obligations, determine and allocate the transaction price and discuss when revenue should be recognised.
(b) Prepare the necessary journal entries (narrative not required) to illustrate how the above transaction and its matching expenses would be recognised under FRS 18 Revenue instead.
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