Question
In each of the following situations, state at which date(s), if any, revenue will be recognised. Explain your reasoning. (7 marks) (a) A contract for
In each of the following situations, state at which date(s), if any, revenue will be recognised. Explain your reasoning. (7 marks)
(a) A contract for the rendering of services is entered into on 1 May 2023. The services are delivered on 15 May 2023. The buyer pays for the services on 30 May 2023. The services are covered by a special warranty which expires on 30 June 2023. The special warranty allows for the goods to be returned and a refund received.
(b) A contract for the sale of goods is entered into on 1 May 2023. The goods are delivered to the buyer for one months evaluation on 15 May 2023. If the buyer is happy with the goods the contract provides for further sales each month. The buyer pays for the evaluation goods on 3 May 2023. The evaluation goods are returnable under normal warranty conditions until 30 June 2023.
(c) A contract for the rendering of services is entered into on 1 May 2023. The services are delivered continuously over a 1-year period commencing on 15 May 2023. The buyer pays for the services on a monthly basis, commencing on 15 May 2023. The buyer may revoke the agreement at any time.
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