On December 1, 20X1, Northern Consulting Ltd. signed a contract with University Inc., which obligated Northern to provide University with 18 hours of consulting services per month from January through December of 20X2. The contract requires University to pay a total of $56,160 for these services, with payments of $4,680 due at the end of each month. Northern has provided similar services to University in the past and has always collected its fees on a timely basis.

IFRS Step

1.

Identify the contract with the customer, specify its terms, and evaluate the probability the customer will pay the transaction price when it becomes due.

The contract is between

Northern

and

University

for

20X2.

Identify the terms as follows:

Part 5

Evaluate the probability the customer will pay the transaction price when it becomes due.

ASPE Step 3. It is probable that the customer will pay for the goods or services when payment becomes due. University has always paid Northern on a timely basis, so it is probable University will pay the bill as it comes due each month. Northern can recognize revenue of $ 18$18 $ 260$260 $ 56 comma 160$56,160 $ 4 comma 680$4,680 each time it provides University with

Part 4

IFRS Step

1.

Identify the contract with the customer, specify its terms, and evaluate the probability the customer will pay the transaction price when it becomes due.

The contract is between

Northern

and

University

for

20X2.

Identify the terms as follows:

Part 5

Evaluate the probability the customer will pay the transaction price when it becomes due.

University

has always paid

Northern

on a timely basis,

but it cannot be predicted if University will pay

so it is probable University will not pay

so it is probable University will pay

the bill as it comes due each month.

Part 6

IFRS Step 2. Identify the separate performance obligations in the contract.

Part 7

IFRS Step 3. Determine the transaction price.

Part 8

IFRS Step

4.

Allocate the transaction price to the separate performance obligations in the contract.

As determined in previous steps, the total transaction price is

$56,160

and it should be allocated across the

216

performance obligation hours.

Part 9

IFRS Step

5.

Recognize revenue when (or as) the business satisfies each performance obligation.

Northern

can recognize revenue of

$ 18$18

$ 260$260

$ 4 comma 680$4,680

$ 56 comma 160$56,160

each time it provides

University

with one hour

one month

one year

of consulting services in

20X2.