- International Research Journal of Applied Finance ISSN 2229 - 6891 Vol. V] Issue - 9 September, 2015 Case Study Series cost or sometimes free mobile telephones to customers that sign multiyear service contracts. The company has been able to keep initial construction costs to a minimum by signing an agreement with a competitor to use the competitor's signal towers on a 10 year lease ending in 2022. Mova has already begun to acquire land in suitable locations for construction of company owned signal towers. Financing of the tower construction will require the company to acquire external funding through debt issuances in 2021. The Treasurer is concerned about the potential impact of the adoption of IFRS 15 on the trading results for the company for the three years 2018 to 2020. The Treasurer has a nance background and needs to know the impact of the new revenue recognition guidelines on reported income in those two years. He requires guidance on the following issues: O Will the effect lower reported earnings? 0 If so, how much compared to earnings determined using IAS 18, the current guidance for revenue recognition? I Will the amount of any decrease affect the cost of borrowing or perhaps even restrict access to some debt opportunities? The treasurer has asked the Controller to assign an accounting staff member to report on the new IFRS 15 guidelines to bring the treasury staff up to date on the changes. He also wants to know how the new standard will affect the revenue recognition arrangements on their 2 year New Soltam contract. This is the company's highest revenue generating transaction and consists of a two year calling contract with a \"free" telephone upon contract signing. Revenue Transaction MoServ offers a package similar to many of its competitors. Customers that sign up for a multiyear contract for phone usage are provided a phone for free or at cost signicantly below the market value of the mobile phone. MoServ's main contract (that provides 95% of corporate revenue) is as follows: 2 Year New Soltam Contract with Moserv Length of contract: 24 months Cancellation policy: Non-cancelahle Monthly fee for mobile service: AED 800 (AED: United Arab Emirates currency) Contract signing bonus: New Soltam 398FX6 sophisticated mobile phone Other information: Normal selling price of Soltam mobile phone without contract: AED 1800. A 24 month contract with no free mobile phone is 870 AED per month. The cost to MOSERV for the Soltam 398FX6 is AED 900 per unit. Specific Instructions and Questions for the Accounting Staff 1. Access one of the websites of one of the Big Four public accounting rms and obtain the rm's publication 0n IFRS 15. You are looking for only an Overview of the guidance. The Treasurer only wants an introduction to the guidance not detailed information. Attach a le to your report with this information or publication for review by the Treasurer. Pagez